Question: Question 1-3. Answer True, False or Uncertain. Briefly explain your answer. 1. In an international economy of perfectly substitutable currencies, an increase in the stock

Question 1-3. Answer True, False or Uncertain. Briefly explain your answer.

1. In an international economy of perfectly substitutable currencies, an increase in the stock of one country's money reduces real value of all monies.

2. The negative correlation between inflation and the real interest rate can be explained by the Fisher effect.

3. The rate of return equality holds in the model of illiquidity.

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