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Consider the following information. The expected world real interest rate r = 4%. Countries A and B have relative stable output growth rates, 934 =

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Consider the following information. The expected world real interest rate \"r\" = 4%. Countries A and B have relative stable output growth rates, 934 = 5% and 9'3 = 3.5%. Country B maintains a stable money supply growth rate1 #3 = 6.5%. If'Couutry A would like to achieve a long-run inat ion rate target NA = 2% by using interest rate policy:| what should its nominal interest rate be? Ination plus interest rate policy will be successful in achieving the long-run ination target if Country A's output growth rate1 9A: is stable. Country B's ination rate1 211:5, is stable. the expected world real interest rate1 5I""'1 is stable

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