Question: Exercise 5. (30 Points. Indicate whether the following statements are true, false or uncertain. Provide an argument for your responses. You may use the theory

Exercise 5. (30 Points. Indicate whether the following statements are true,

Exercise 5. (30 Points. Indicate whether the following statements are true, false or uncertain. Provide an argument for your responses. You may use the theory seen in class to support your answers. (a) (10 Points. In the TNT model with endowments, a decrease in the international interest rate creates a deterioration of the current account, and an appreciation of the real exchange rate. 4 (b) (10 Points. If the face value of sovereign debt is in the increasing part of the Debt Laffer Curve," a debt haircut can lead to an increase in the secondary market value of debt. (c) (10 Points.] In an economy in which Ricardian Equivalence holds, a temporary in- crease in government expenditures precipitates a deterioration in the current account

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