Use the table below to answer the following questions.
Table 26.3.1
-Refer to Table 26.3.1. Consider the economy represented in the table. The economy eventually moves to its long-run equilibrium. In long-run equilibrium, the price level is ________ and real GDP is ________ billion.
Definitions:
Currency
A system of money in general use in a particular country, facilitating the exchange of goods and services.
Interest Rate Parity
A theory which says that the difference between the interest rates of two countries is equal to the differential between the forward exchange rate and the spot exchange rate of their currencies.
Forward Rates
The predetermined interest rates or currency exchange rates agreed upon for transactions that will be executed at a future date.
Spot Rate
The existing market cost at which a certain asset is offered for buy or sell, ensuring immediate delivery.
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