Using the model of aggregate expenditure and exchange rates, suppose that the Bank of Canada holds interest rates fixed. Other things equal, if the Canadian stock markets suddenly crash, we expect Canadian output to ________ because of a ________ and a ________ in inflation.

Question 13 options:

a)	not change; real exchange rate depreciation; rise

b)	fall; real exchange rate appreciation; fall

c)	rise; real exchange rate appreciation; rise

d)	rise; real exchange rate depreciation; rise

e)	None of the answers are correct

The central bank reduces ________ as it reduces fluctuations in the output gap.

Question 14 options:

a)	the ex post nominal interest rate

b)	unemployment fluctuations

c)	None of the answers are correct

d)	the natural rate of unemployment

e)	potential output

If a country's nominal exchange rate is 2, the domestic price level is 100 and the foreign price level is 150, the real exchange is

Question 15 options:

a)

2.33

b)

1.33.

c)

3.33

d)

0.67.

e)	None of the answers are correct

Middle-income countries can finance their government spending from _________. But this may be cause problems if there is _____________.

Question 16 options:

a)	domestic investment; a low tax rate

b)	None of the answers are correct

c)	domestic governments; deflation

d)	foreign savers; a lot of exchange-rate volatility

e)	foreign governments; little support from foreign citizens