Consider a two-period-lived small open economy with output levelsY1in period 1 andY

2in period 2 and facing a world real interest rater

The economy has no initial wealth. There is no physical investment or government spending in each period.

The residents of the economy prefer to maintain a perfectly smooth consumption pattern,C1=C2=C

Assume thatY1=350,Y2=400, andr=6%

Use the information to determine the following.

Consumption in each period, C

Current account in period 1,CA1

The economy was anet borrower OR net lender with the rest of the world in period 1.

Net exports in period 2,NX2

Net factor income from abroad in period 2,NFP2