2. Consider a small open economy that has an initial external wealth of 100 units. It earns interest at the world real interest rate of 8 percent. If the country runs a trade deficit of 8 units in period 1 (assuming no other transactions and no valuation effects) what happens to its external wealth? a. Wealth increases because interest earnings augment an increase in foreign assets caused by the trade deficit. b. Wealth decreases because the trade deficit implies that net foreign liabilities are increasing. c. Wealth does not change because interest earnings offset the impact of the trade deficit. d. Wealth decreases because the interest earnings are already reflected in the trade deficit