PRICE (Rubles per won) Russian ruble to PRIC QUANTITY OF WON Demand for Won The decrease in Russian incomes causes the South Korean won to relative to the South Korean won. relative to the Russian ruble and causes the Russian ruble to Suppose the price level in Russia rises by 7%, while the price level in South Korea remains the same. That is, the inflation rate in Russia is higher than in South Korea. Drag the appropriate curve or curves on the following graph to illustrate how this affects the market for South Korean won. QUANTITY OF WON Supply of Won Demand for Won Demand for Won Supply of Won (?) Suppose the real interest rates in Russia and South Korea are initially the same. Then the real interest rate in Russia rises, while the real interest rate in South Korea remains the same. This will cause the supply of won to and the demand for won to which causes the relative to the South Korean won. PRICE (Rubles per won) 6. Changes in the foreign-exchange market The following questions focus on the exchange rate between the Russian ruble and the South Korean won. Assume the exchange rate is flexible. The exchange rate is defined as the number of rubles you must pay for one won. Suppose a recession in Russia causes Russian incomes to decrease, while incomes in South Korea remain the same. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for South Korean won if all other things remain equal. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. QUANTITY OF WON Supply of Won Demand for Won Demand for Won Supply of Won ? The decrease in Russian incomes causes the South Korean won to relative to the South Korean won. relative to the Russian ruble and causes the Russian ruble to Suppose the price level in Russia rises by 7%, while the price level in South Korea remains the same. That is, the inflation rate in Russia is higher than in South Korea. Drag the appropriate curve or curves on the following graph to illustrate how this affects the market for South Korean won.