Consider a country that has been running current account deficits every year for many year. In the following problem, we will explore under what circumstances will lenders continue to extend credit to such economy. Assume that gross national product Y is the sum of GDP and net foreign investment income, Yt = GDPt + rIIPt where r is the (constant) interest rate the country earns on wealth held abroad and pays on its liabilities to foreigners. Note that the current account in any year t can be written as CAt = IIPt+1 IIPt. Define net exports as the difference between what a country produces domestically and what it demands, N Xt = GDPt (Ct + It + Gt)