Exercise 5.1 (TFU) Indicate whether the following statements are true, false, or uncertain and explain why. 1. Good news about future productivity leads to a trade deficit today. 2. A deterioration in the terms of trade causes a fall in consumption and a deterioration in the current account. 3. Countries A and B are identical in all respects, except that the initial net international asset position (Bo) of country A is larger than that of country B. It must be the case that: (a) Consumption in country A is higher than consumption in country B in all periods. (b) Investment in country A is higher than investment in country B. (c) The trade balance in country A is higher than in country B. (d) None of the above. 4. A country populated by more impatient households (i.e., a country with a lower #) will consume more and invest less in period 1. 5. An improvement in productivity in period 1 (higher A,) causes an increase in net investment income in period 2. 6. An increase in the world interest rate (higher r*) causes an increase in the current account in period I and a decrease in the current account in period 2. 7. Good news about future productivity increases consumption already now regardless of whether the economy is open or closed. 8. All else constant, investment is more stable in open economies than in closed economies because funding is not limited to the domestic capital market