2. (Financial Crises and the Current Account) Consider a two-period model of a small open economy with a single good each period. Let preferences of the representative household be described by the utility function: U(C1, C2) = In C1 + In C2, (1) where C1 and C2 denote consumption in periods 1 and 2, respectively. In period 1, the firm does not operate and household receives an endowment of Q1 = Q instead. In period 2, the household receives profits, denoted by 72, from the firms it owns. In period 1, households and firms have access to financial markets where they can borrow or lend at the interest rate ri. Firms borrow in period 1 to invest in physical capital. They are subject to a collateral constraint of the form: Di 0. In turn, firms use the physical capital purchased in period 1 to produce final goods in period 2. The production technology in period 2 is given by: Q2 = A211, A2 > 0 and 0 0. In turn, firms use the physical capital purchased in period 1 to produce final goods in period 2. The production technology in period 2 is given by: Q2 = A211, A2 > 0 and 0