Indicate whether the following statements are true, false, or uncertain and explain why. 1. A two-period economy runs trade surpluses in both periods. It follows that the current account in period 1 can have either sign (depending on the magnitude of T B1), but the current account in period 2 must be positive. 2. A country starts 2017 as a net creditor. The interest rate on its net asset position is 10 percent. That year, it runs a current account deficit. It follows that the trade balance in 2017 was also negative. 3. The fact that over the past quarter century the United States has run larger and larger current account deficits is proof that American household savings have been shrinking
Indicate whether the following statements are true, false, or uncertain and explain why.
1. A two-period economy runs trade surpluses in both periods. It follows that the current account in period 1 can have either sign (depending on the magnitude of T B1), but the current account in period 2 must be positive.
2. A country starts 2017 as a net creditor. The interest rate on its net asset position is 10 percent. That year, it runs a current account deficit. It follows that the trade balance in 2017 was also negative.
3. The fact that over the past quarter century the United States has run larger and larger current account deficits is proof that American household savings have been shrinking
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