aaaa
When the money supply in NZ permanently increase, in the sort run, because the price is rigid, which means the price could not adjust to the change of the money supply, so the real money balance increase from M0/P0 to M1/P1. Due to the increase of real money balance, the interest rate of NZ decrease, because the higher money supply also means that there is more liquidity in the economy, the opportunity cost of holding the money decline. For the investors, when the money supply increase, they will expect the long-run exchange rate will rise between the NZ dollars and the Japanese Yen, according to the PPP.