Please answer each question with True or False and an explanation in around three sentences.

1. Both in theory and in practice, forward exchange rates are not good predictors of future spot rates. 2. When the US practices expansionary monetary policy other countries have (a) a good reason to resist currency appreciations and (b) several tools to achieve that goal. 3. Departures from the law of one price might explain Why PPP holds only in the long run. 4. We do not observe sanctions against sovereign defaulters, so the threat of sanctions cannot be the reason for sovereign lending. 5. In theory, a downwardsloping term structure of interest rates predicts either low growth or high ination in the future. 6. A currency union has no advantages over a xed exchange rate systern