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uppose that during the early 2010s the Chinese long-run real GDP grew by 7% per year and the nominal money supply grew by 9% per
uppose that during the early 2010s the Chinese long-run real GDP grew by 7% per year and the nominal money supply grew by 9% per year. a) What was the long-run inflation rate per year? b) If expected inflation was equal to actual inflation and the world long-run real interest rate, r*, was 2%, what was the Chinese nominal interest rate? Illustrate your answer on the Chinese asset markets graph by placing the nominal interest rate on the vertical axis. Use letter A to rep
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