(a) Consider a two period model of a smallopen economy. Being careful to state anyassumptions you make, derive the optimallevel of consumption as a function ofcurrent andfuture output.(b) Consider a growing economy (i.e.,output tomorrow is greater that outputtoday). Showthat this economy will run a current accountdeficit and show that there are welfaregainsfrom borrowing internationally.

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onsider a two period model of a small n economy. Being careful to state any mptions you make, derive the optimal of consumption as a function of ent and e output. onsider a growing economy (i.e., ut tomorrow is greater that output y). Show

onsider a two period model of a small n economy. Being careful to state any mptions you make, derive the optimal of consumption as a function of ent and e output. onsider a growing economy (i.e., ut tomorrow is greater that output y). Show

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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