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Q. Consider two countries: Japan also Korea. In 1996 Japan experienced relatively slow output growth (1percent (%)), while Korea had relatively robust output growth (6percent (%)). Assume the Bank of Japan allowed the money supply to grow by 2percent (%) each yr, while the Bank of Korea chose to maintain relatively high money growth of 12percent (%) per yr.For subsequent questions utilize the simple monetary model (where L is constant). You will find it easiest to treat Korea as the home country also Japan as the foreign country.
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