5. (3) Consumer spending, and therefore GDP, is a function of consumer wealth. Suppose that the citizens of the country of Randomonica invest heavily in the USA stock market: they hold much of their wealth in US dollars even though they care about their wealth in terms of Randomonica Rands. Make sure you explain your answers.

a. (1) The US dollar unexpectedly and permanently depreciates relative to the Randomonican currency, the Rand (US perspective). If many Randomonican's had invested their wealth in the US financial markets, what will happen to the Randomonica's GDP? Explain.

b. (1) If the US dollar unexpectedly but permanently appreciates relative to the Randomonican currency, what would happen to the Randomonica's GDP? Explain.

c. (1) Given your answer to the prior questions, why may the government of Randomonica choose to fix the exchange rate between the Rand and the US dollar, instead of allowing it to fluctuate with the market?