PART I: TRUE/FALSE/UNCERTAIN QUESTIONS: (7) Because of the unique position of the dollar as a world money, the United States has financed its current-account deficits by selling U.S. currency, bonds and stocks to foreign citizens, businesses and governments. (8) The high correlation between national savings and domestic investment rates has been interpreted as evidence that capital is internationally mobile. (9) The risk premium on foreign exchange is identically equal to real inter- est differential across countries. (10) When prices are sticky, a change in the nominal exchange rate auto- matically translates into a change in the price of imported goods relative to the local goods (that is the real exchange rate). (11) A nation consisting of people with high rates of time preference will tend to be a net foreign borrower. (12) The forward exchange rate may contain a risk premium and so deviate from the market's expectation of the future nominal exchange rate. (13) A booming economy induces trade balance deficits, which increases the likehood of devaluation (depreciation). (14) Based on purchasing power parity (economic fundamentals) the Cana- dian dollar is currently undervalued