determine whether each statement is true or false in each scenario everything else is held constant so that the only change you need to consider is the one presented in a given scenario. If Japan’s price level increases more than China’s price level Japan will see its current account improve the incomes in old world increased by 15% while incomes in New World increased by 18%. New World‘s current account will be worsen as a result. See the interest rate in Hong Kong drops by 2% while the interest rate in Germany drops by 3% Germany is financial markets will experience a net flow of capital. A financial website states that the Indian rupee is expected to depreciate against Japanese yen upon reading this. Matthew concludes that the capital will flow from Japan to India when South Korea‘s currency the one appreciates falling exports, cause South Korean aggregate demand to decrease leading in a drop in the price level
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