The Australia to Britain, decreasing the interest rate in Britain and increasing the interest rate in Australia.
The equilibrium real interest rate is the short-term rate that is consistent with aggregate production at potential and stable inflation in the long run.
We have:
The equilibrium real interest rate in Britain increases to 8 percent, while the equilibrium real interest rate in Australia remains at 4 percent.
From the above data, we can say,
Australia to Britain, decreasing the interest rate in Britain and increasing the interest rate in Australia.
Thus, the Australia to Britain, decreasing the interest rate in Britain and increasing the interest rate in Australia.
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