Use the long-run money market model. If the money supply is growing at 4% in the United States and 5% in the United Kingdom, while real GDP is rising at 2% in the United States, and at 1% in the United Kingdom, what is the expected rate of change in the nominal exchange rate E$/POUND? State which currency is appreciating/depreciating clearly.

2- Suppose a basket of goods in the United States costs $1000, and the same basket of goods in Japan costs ¥120,000. What is the PPP exchange rate between these two economies? State units clearly

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To calculate the expected rate of change in the nominal exchange rate EPOUND using the longrun money ... View the full answer