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Use the money market with the general monetary model, and the foreign exchange (FX) market to answer the following questions The questions consider the relationship

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Use the money market with the general monetary model, and the foreign exchange (FX) market to answer the following questions The questions consider the relationship between the Australian dollar (\$) and the U.K. British pound (pound) in Australia, the real income Y($) is 10.0 trillion, the money supply M($) is $20.0 trillion, the price level P($) is $4.0, and the nominal interest rate i(S) is 5.0% per annum. In the U.K., the real income Y (pound) is 20.0 trillion, the money supply M(pound) is 20.0 trilion pounds, the ghice level P (pound) is 2.0 pounds, and the nominal interest rate i(pound) is 5.0% per annum. Note that the uncovered interest parity (UIP) holds all the time and the purchasing power parity (PPP) holds only in the long run. Assume that the nex long-run levela are achieved in 1 year from any permanent changes in the economies. Now, today at time T, the real output of Australia, Y($), rose by 3.0%, permanently, while the money supply of Auatraiia, M(S), and the money supply and the real income of the U.K., M (pound) and Y (pound), do not change at all. as the price level of the country Report question issue 9 Notes (7 Use the money market with the general monetary model, and the foreign exchange (FX) market to answer the following questions The questions consider the relationship between the Australian dollar (\$) and the U.K. British pound (pound) in Australia, the real income Y($) is 10.0 trillion, the money supply M($) is $20.0 trillion, the price level P($) is $4.0, and the nominal interest rate i(S) is 5.0% per annum. In the U.K., the real income Y (pound) is 20.0 trillion, the money supply M(pound) is 20.0 trilion pounds, the ghice level P (pound) is 2.0 pounds, and the nominal interest rate i(pound) is 5.0% per annum. Note that the uncovered interest parity (UIP) holds all the time and the purchasing power parity (PPP) holds only in the long run. Assume that the nex long-run levela are achieved in 1 year from any permanent changes in the economies. Now, today at time T, the real output of Australia, Y($), rose by 3.0%, permanently, while the money supply of Auatraiia, M(S), and the money supply and the real income of the U.K., M (pound) and Y (pound), do not change at all. as the price level of the country Report question issue 9 Notes (7

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