1. The movement to more flexible exchange rates has made it necessary to more fully coordinate the use of monetary and fiscal policy. Explain why this is so, using the IS/LM/BP model, an income target, and an interest rate target? 2. True/False questions. Justify your answers 1) If a country has a current account deficit, then S > I + (G - T) 2) Suppose that, during 2020, country A had exports of goods of $50, imports of goods of $60, exports of services plus primary income receipts from abroad of $36, and imports of services plus primary income payments abroad of $30. In addition, during 2015, country A made $15 of unilateral transfers abroad and received no unilateral transfers from abroad. Given this information, country A’s "balance on current account" in 2020 was a $19 deficit. 3) If a speculator observes that the current 3-months forward rate on Swiss francs is $1.05= 1 franc, but he/she expects that the spot rate in 3 months will be $1.10 = 1 franc, then this speculator would now buy dollars on the forward market.