2. Assume that countries A and B are identical in all respects, excepts that the initial international asset position ( NIIP = B 0 ) of country A is lower than that of the country B. Indicate whether the following statements are true, false, uncertain and explain why. a. It must be the case that consumption in country A is lower than the consumption in country B. b. It must be the case that trade balance in country A in period 1 is higher in country B. c. It must be the case that the current account in country A in period 2 is higher than in country B. d. All of the above statements are true.
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2- Assume that countries A and B are identical in all respects- except.docx
1. 2. Assume that countries A and B are identical in all respects, excepts that the initial international
asset position ( NIIP = B 0 ) of country A is lower than that of the country B. Indicate whether
the following statements are true, false, uncertain and explain why. a. It must be the case that
consumption in country A is lower than the consumption in country B. b. It must be the case that
trade balance in country A in period 1 is higher in country B. c. It must be the case that the
current account in country A in period 2 is higher than in country B. d. All of the above
statements are true.
