Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer.

Assume that households in Econland increase their savings for retirement.

(a) Using a correctly labeled graph of the loanable funds market, show how the increase in savings will affect the equilibrium real interest rate.

(b) Based solely on the real interest rate change identified in part (a), what will happen to Econland's purchases of foreign assets? Explain.

(c) Consider the foreign exchange market for Econland's currency.

(i) Based on your answer to part (b), what will happen to the international value of Econland's currency?

(ii) Based on your answer to part c (i), would Econland's central bank buy or sell its currency in the foreign exchange market to offset the change in the value of its currency?