3) True, False, Uncertain (30 points total, answer all parts) In this section, describe each statement as true, false or uncertain and explain your answer. Each question is worth X marks: all of the marks are for explanation, none, for the true, false or uncertain.

Answers should be brief. a) If a country has a floating exchange rate, then the fact that it has a high nominal interest rate (relative to world nominal interest rates) will make it attractive to international investors seeking high returns. b) A country with a negative trade balance and no official exchange intervention must necessarily have a surplus in the financial account. c) A country can have an absolute advantage in the production of a good, but not have a comparative advantage. d) If a country unilaterally reduces the tariff rate on an imported good, this will necessarily lead to an improvement in domestic welfare. e) If country A's ten-year sovereign bonds have a higher yield than those of country B's, even though the exchange rate between the two country's is fixed, this indicates that market participants do not believe that the exchange rate will remain fixed.