I. True/False/Uncertain - Briefly explain. No credit without an explanation (8 marks each).

1. Countries with extremely centralized union structure face excessive wage claims.

2. Countries with higher economic share of services would face more symmetric shocks.

3. More exchange rate risk outside a monetary union decreases firm profitability.

4. More trade integration and less symmetry can make a monetary union optimal.

5. Lowering the costs of sovereign default, increases the chances of default.