QUESTION 13 For the following questions assume that the Fed is committed to price level stabili, initially the exchange rate is 10. The US interest rate starts at 0.15 and the Fed increases the money supply by twenty percent (0.2) reducing the interest rate to 0.01 Assume that the economy completely adjusts after two years. Two years from now, the exchange rate 10 points Save 0.80 1.0 31.10 QUESTION 14 10 points SA What is the change in the price level over the next two years 020 0.10 00 0.10 10 points Sowe QUESTION 15 Starting from today, what the once in the interest rate over the next two years 0,10 0.00 0.14 0.10 10 points QUESTION 13 For the following questions assume that the Fed is committed to price level stability. Initially, the exchange rate is 1.0. The US interest rate starts at 0.15 and the Fed increases the money supply by twenty percent (0.2) reducing the interest rate to 0.01 Assume that the economy completely adjusts after two years. Two years from now, the exchange rate is O 1.2 0.80 1.0 1.10 10 points QUESTION 14 What is the change in the price level over the next two years 0.20 0.10 0.0 -0.10 10 points QUESTION 15 Starting from today, what is the change in the interest rate over the next two years 0.10 0.00 0.14 O 0,10 QUESTION 13 For the following questions assume that the Fed is committed to price level stabili, initially the exchange rate is 10. The US interest rate starts at 0.15 and the Fed increases the money supply by twenty percent (0.2) reducing the interest rate to 0.01 Assume that the economy completely adjusts after two years. Two years from now, the exchange rate 10 points Save 0.80 1.0 31.10 QUESTION 14 10 points SA What is the change in the price level over the next two years 020 0.10 00 0.10 10 points Sowe QUESTION 15 Starting from today, what the once in the interest rate over the next two years 0,10 0.00 0.14 0.10 10 points QUESTION 13 For the following questions assume that the Fed is committed to price level stability. Initially, the exchange rate is 1.0. The US interest rate starts at 0.15 and the Fed increases the money supply by twenty percent (0.2) reducing the interest rate to 0.01 Assume that the economy completely adjusts after two years. Two years from now, the exchange rate is O 1.2 0.80 1.0 1.10 10 points QUESTION 14 What is the change in the price level over the next two years 0.20 0.10 0.0 -0.10 10 points QUESTION 15 Starting from today, what is the change in the interest rate over the next two years 0.10 0.00 0.14 O 0,10