At time t=0, R$= 15%, R = 15%, and E$/€=1. Assume that Reserve Bank of Australia permanently increases money supply in Australia by 30% at time t=2. In addition, assume the following: 1. The policy change is anticipated at t=1 2. Prices are fixed in the short run 3. Prices completely adjust to the change in money supply in the long run 4. Output is always fixed at Y 5. RE 15% at t=1 and t=2 Select the most appropriate option: O A. E$/ € O B. E$/ € O C. E$/ € 1.3 at t=1 and t=2; E$/€-1.3 in the long-run 1.3 at t=1 and in the long-run; E$/>1.3 at t=2 1.3 at t=1 and t=2; Es/>1.3 in the long-run O D. E$/€ 1.3 at t=1, t=2, and in the long-run O E. E$/>1.3 at t=1; Es/e=1.3 at t=2 and in the long-run

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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At time t=0, R$= 15%, R = 15%, and E$/€-1. Assume that Reserve Bank of Australia permanently increases money supply in Australia by 30% at time t=2.
In addition, assume the following:
1. The policy change is anticipated at t=1
2. Prices are fixed in the short run
3. Prices completely adjust to the change in money supply in the long run
4. Output is always fixed at Y
5. R€= 15% at t=1 and t=2
Select the most appropriate option:
O A. E$/ € 1.3 at t=1 and t=2; E$/€ 1.3 in the long-run
O B. E$/ €
O C. E$/ €
1.3 at t=1 and in the long-run; E$/€>1.3 at t=2
1.3 at t=1 and t=2; Es/€>1.3 in the long-run
O D. E$/ €
1.3 at t=1, t=2, and in the long-run
O E. E$/€>1.3 at t=1; E$/€=1.3 at t=2 and in the long-run
Transcribed Image Text:At time t=0, R$= 15%, R = 15%, and E$/€-1. Assume that Reserve Bank of Australia permanently increases money supply in Australia by 30% at time t=2. In addition, assume the following: 1. The policy change is anticipated at t=1 2. Prices are fixed in the short run 3. Prices completely adjust to the change in money supply in the long run 4. Output is always fixed at Y 5. R€= 15% at t=1 and t=2 Select the most appropriate option: O A. E$/ € 1.3 at t=1 and t=2; E$/€ 1.3 in the long-run O B. E$/ € O C. E$/ € 1.3 at t=1 and in the long-run; E$/€>1.3 at t=2 1.3 at t=1 and t=2; Es/€>1.3 in the long-run O D. E$/ € 1.3 at t=1, t=2, and in the long-run O E. E$/€>1.3 at t=1; E$/€=1.3 at t=2 and in the long-run
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