nswer the following questions using the long run model of inflation and exchange rates developed in class. The Fed increases the money supply by 10 percent (0.10) while the US price level increases by five percent (0.05). Growth in Europe is zero (0.0). The US exchange rate depreciates by ten percent (0.10). What is the US growth rate? 0.10 0.05 0.25 1.0 Part b What is inflation in Europe. 0.02 -0.05 0.10 0.075 Part c What is money supply growth in Europe. 0.10 -0.05 0.05 0.025
Answer the following questions using the long run model of inflation and exchange rates developed in class. The Fed increases the money supply by 10 percent (0.10) while the US
0.10
0.05
0.25
1.0
Part b
What is inflation in Europe.
0.02
-0.05
0.10
0.075
Part c
What is money supply growth in Europe.
0.10
-0.05
0.05
0.025
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