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At time F0, R35 =15/a, R=15%, and E$1 =1. Assume that Reserve Bank ofAustralia permanently increases money supply inAustraLia by 25% at time F2. In
At time F0, R35 =15\"/a, R=15%, and E$1 =1. Assume that Reserve Bank ofAustralia permanently increases money supply inAustraLia by 25% at time F2. In addition, assume the following: The policy change is anticipated at 1:1 Prices are xed in the short run Prices completely adjust to the change in money supply in the long run In the short run, domestic net exports (NX) decrease due to an increase in E ( due to the J-curve effect). R =15% att=1 and i=2 Select the most appropriate option 0 A_ E$i :125 and R$ :15% at t:1 and in the longrun; E$i >125 and R$125 and R$125 and R$125 and R$125 and R$
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