In a long run equilibrium, Country A has an interest rate of 10%, whereas Country B has an interest rate of 7%. Real output in each country is growing at 2% per year. The money growth rate in Country B is 6%. Please provide explanations for each point below (show you calculations).
Which country has the higher inflation rate?
Which country has a higher real interest rate?
Which is the inflation rate in Country B?
What is the inflation rate and money growth rate in Country A?