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