TRUE/FALSE. Provide brief explanation to justify your answer. (5 Marks each) Home output falls more under a floating rate than under a fixed rate in response to an adverse temporary export demand shock. [Diagram required] Under PPP (and by the Fisher Effect), A rise in a country's expected inflation rate will eventually cause a less than proportional rise in the interest rate that depositors of its currency offer to accommodate the rise in expected inflation. The Marshall-Lerner Condition states that the sum of import and export elasticities must be equal to one in order for depreciation to occur. The J-curve illustrates the long-term effects of depreciation on the current account. [diagram required]