In answering this question, assume that there are no valuation changes of assets, that the net international compensation to employees equals zero and that there are no net unilateral transfers. Consider a threeperiod economy that at the beginning of period 1 has a net foreign asset position of -175. In each of the three periods 1. 2 and 3, GDP is 200. The interest rate on bonds held between any two consecutive periods is 5 percent; that is. r0 = r1 =r2 = r= 0.06 {A} For this part of the question only. assume that in period 1, the economy runs a current account defificit of 5 percent of GDP. Find the trade balance in period 1 [T Bi}, the current account balance in period 1 {CA1}, and the counth net foreign asset position at the beginning of period 2 [Bi]. {Distate the transversality condition for this economy. {Ctir this part of the question only, assume that in period 1, the economy runs a current account defificit of 5 percent of GDP and that in period 2, the trade balance of the economy is zero. that is, T E52 = 0. Is the economy liying beyond its means? To answer this question fifind the economy's current account balance in period 3 and the trade balance in period 3. Is this value for the trade balance feasible? [Hint: Keep in mind that the trade balance cannot exceed GDP.] {E}Compute as a percentage of GDP the maximal current account deficit in period 1 that is feasible for the economy