Consider a two-period endowment economy model of a small open economy. In the first period, households receive an endowment ofQ1=10and in the second period, they receive an endowment ofQ2=15. The initial external wealth is zero. Households can save or borrow at the interest rater=0.5.

Assuming that households borrow or lend to smooth consumption over time, setting C= C1= C2, the level of the trade balance at time one is

Select one:

TB1= 0

TB1= -1

TB1= -2

TB1= 5

TB1= -5