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Consider two countries, Japan and Korea. In 1996, Japan experienced relatively slow output growth (1%), whereas Korea had relatively robust output growth (6%). Suppose the

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Consider two countries, Japan and Korea. In 1996, Japan experienced relatively slow output growth (1%), whereas Korea had relatively robust output growth (6%). Suppose the Bank of Japan allowed the money supply to grow by 2% each year, whereas the Bank of Korea chose to maintain relatively high money growth of 12% per year. For the questions 15-18, use the simple monetary model (where L is constant). You will find it easiest to treat Korea as the home country and Japan as the foreign country. it easiest to treat Korea as the home country and Japan as the foreign country

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