3. A South Korean company buys 20 million silicon wafers from German company, Siltronic. The currency in South Korea is the won and the currency in Germany is the euro.

(a). How will the transaction above affect South Korea's Aggregate Demand?

(b). How will the transaction above affect South Korea's current account balance? Explain.

(c). Draw a correctly-labeled graph of the foreign exchange market for the South Korean won which shows how an increase in South Korean financial investment in Germany affects each of the following.

i. The supply of the South Korean won.

ii. The value of the South Korean won relative to Germany's euro.

B) Will the central bank of South Korea want to buy or sell euros in the foreign exchange market to stabilize the won / euro exchange rate? Explain.