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Now assume that in period 1, the country instead runs a much larger current account deficit of 10 percent of GDP. Find the country’s net foreign asset position at the end of period 1, B1. Is the country living beyond its means? If so, show why.
Consider a two-period economy that at the beginning of period 1 has a net foreign asset position of −100. In period 1, the country runs a current account 1 ECON […]
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