Problem 3: Current Account Deficits in the Euro Area" Based on your reading of Blanchard and Giavazzi's Brookings Papers article, evaluate as being true, false or it depends the following statements (write 1-2 paragraphs for each): 1. Euro Zone integration in early 2000's allowed Southern European countries to run current account deficits because (1) they now faced lower interest rates and (2) needed to borrow for investment to catch up to more developed countries of the Northern Europe. 2. Policymakers should be acutely concerned about these current account deficits, as they are driven by the private sector borrowing as opposed to sovereign borrowing by governments. 3. Closer financial and trade integration between countries allows for larger gaps be- tween domestic investment and savings and should lead to larger current account imbalances, with poorer developing countries running large current account deficits against richer developed countries. Problem 3: Current Account Deficits in the Euro Area" Based on your reading of Blanchard and Giavazzi's Brookings Papers article, evaluate as being true, false or it depends the following statements (write 1-2 paragraphs for each): 1. Euro Zone integration in early 2000's allowed Southern European countries to run current account deficits because (1) they now faced lower interest rates and (2) needed to borrow for investment to catch up to more developed countries of the Northern Europe. 2. Policymakers should be acutely concerned about these current account deficits, as they are driven by the private sector borrowing as opposed to sovereign borrowing by governments. 3. Closer financial and trade integration between countries allows for larger gaps be- tween domestic investment and savings and should lead to larger current account imbalances, with poorer developing countries running large current account deficits against richer developed countries