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At time i=0, R5 =15%, R=15%, and EM =1. Assume that Reserve Bank efAusn-alia permanently Increases money supply inAustralia by 30% at time t=2. In
At time i=0, R5 =15%, R=15%, and EM =1. Assume that Reserve Bank efAusn-alia permanently Increases money supply inAustralia by 30% at time t=2. In addition, assume the following: I. The policy change is anticipated at i=1 2' Prices are xed in the short run 3. Prices completely adjust to the change in moneyr supplyr in the long run 4. In the short run, domestic net exports (NX) decrease due to an increase in E ( due to the J-curve effect). stag =15% att=1andt=2 Select the most appropriate option: 0 A. Eye =l.3 and R5 =1 5% at F] and in the long-run; Eye >13 and R$l.3 and R$l.3 and K$1 .3 and R$l.3 and R$
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