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Assume in country-A Central Bank cares only about keeping the price level stable & in country-B, its central bank cares only about keeping output & employment at their natural rates.
Determine how in the two country, their central bank would respond to
a) An exogenous enhance in the velocity of money.
b) An exogenous enhance in the price of oil.
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There are many other macroeconomic indicators which one might expect to be affected following an oil price hike. Perhaps more obviously affected than GNP is inflation. DePratto et
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