Comoria and Grondar are two small open economies with no output growth. The demand for real money balances in both economies is given by 4 = kY, where Y is output and k is a constant. As- sume...

Extracted text: Comoria and Grondar are two small open economies with no output growth. The demand for real money balances in both economies is given by 4 = kY, where Y is output and k is a constant. As- sume purchasing power parity holds and the money growth rate is 5% in Comoria and 10% in Grondar. Then, in the long run, expected inflation is . in Comoria, the nominal exchange rate (amount of Co- moria currency for 1 unit of Grondar currency)., and the real exchange rate . lower, appreciates, appreciates. higher, depreciates, depreciates. higher, depreciates, is unchanged. (a) (b) (c) (d) lower, depreciates, depreciates. lower, depreciates, is unchanged. (e)