State whether each of the following statements is True or False. Carefully explain your answer.

(a) "When the interest rates in Australia increase Australian dollar, ceteris paribus, tends to depreciate relative to other currencies. This happens because foreign investors would prefer to enter other markets with lower borrowing costs." (3 marks)

(b) "If inflation increases across developed economies, Central Banks of these countries will respond by increasing their target interest rates. This in turn will make firms' returns on investment more attractive and will lead to an increase in investment and aggregate demand in the economy, pushing the price level even higher. This vicious circle is one of the reasons why monetary policy is ineffective in the current economic environment." (3 marks)

could you please show me the correct answers to these that would garner full marks. thank you.