Clearly indicate in your answers whether the following statements (in italics) are TRUE or FALSE and then write 100 to 120 words (and/or calculations) to identify and explain the essential economic features of the concept, principle, model or theory within each of the statements. (5 marks each) [25 marks in total] 1. Baby boomers (people aged 54-75 years) represent the largest population cohort in Australia (21.5%). "As more of this generation enter retirement, we can expect to see both a higher real interest rate and a higher real exchange rate because retired people generally save less than working people and retired people also purchase many imported products." 2. A basket of goods and services that costs $50 in Australia costs 350 kroner in Norway, and the current exchange rate is 6.78 kroner per Australian dollar. Over the next 5 years, that same basket of goods and services rises to $60 in Australia and 408.6 kroner in Norway. "Assuming the nominal exchange rate is unchanged it can be seen that the purchasing power parity has also been maintained." 3. According to the Australia Department of Foreign Affairs and Trade, the USA is the country with the largest amount of foreign investment in Australia. "If the US suddenly becomes less inclined to invest in Australia, not only would Australia's net foreign investment decrease, its real interest in the loanable funds market would increase and net exports would decrease."