(a) The real interest rate in the country of Questor is 5% per annum, and the exchange rate is e0. As a newly developing country, the real estate market is now booming and most citizens are eager to buy property of their own. (i) Explain how you would expect this to affect the interest rate in Questor and use supply and demand curves to explain how the exchange rate and the quantity of funds in circulation in the Questorian economy might change. [4 marks] (ii) Discuss how this change in the exchange rate will affect the terms of trade in Questor. [4 marks] (iii) The Questorian government would like to return the exchange rate to e0. Discuss two courses of action can they take and, in each case, determine if it would result in a change in inflation.