Part 1 (40 points): For each statement, discuss whether you think the claim is true, false, or uncertain. Support your answer in a few sentences and diagrams, and possibly some equations. You will not need any lengthy mathematical derivation for this part.

Answer each question in a separate page and clearly indicate which question you are discussing in each page.

1. In the real intertemporal model in Chapter 11, an increase in current government expenditure is a good economic stimulus policy as it increases the aggregate output and employment.

2. Based on the monetary intertemporal model in Chapter 12, if the central bank wants to achieve a fixed price level, it needs to fix its money supply regardless of any shocks to the economy

3. A country with the fixed exchange rate regime tries to maintain the real exchange rate at a desired fixed level.

4. In a model of the SOE in Chapter 15, an increase in future TFP (an expectation of it) does not affect the current period equilibrium at al