1.Tell whether each of the following statements is true, false, or uncertain, and explain your answer.

a.If exchange rates are fully flexible, saving equals investment, and the government budget is in deficit, then the capital account must be in surplus.

b.In our small-country model with flexible exchange rates, increased government spending will increase equilibrium output and crowd out some private investment.

c.If the Federal Reserve wants to maintain a fixed interest rate, then a fiscal expansion must be followed by a monetary contraction.

d.Monetarists advocate flexible, active use of monetary policy to stabilize the level of aggregate demand in the face of exogeneous shocks.

e. In an economy that is committed to maintaining a fixed exchange rate, monetary policy is a more effective stabilization tool than fiscal policy