please show your work.

a Problem setlpdf (page 2 of 2) v Q Problem 2 Explain how each of the following transactions generates two entries - a credit and a debit Screen Shot 2020-0...25.os PM dollars held in its reserve to buy back its own currency RMB in the market. Screen Shot 2020-0.i..25.18 PM in the balance of payments account of the United States and describe how each entry would be classied. (a) The central bank of China carries out an ofcial foreign exchange intervention in which it uses (b) US citizen pays 50 euro cash that she withdrew from Credit Lyonnais ATM using the Chase credit card to camp on a campsite in the French countryside. (c) US citizen buys a share of French stock7 paying by writing a check on an account with a Swiss bank. Problem 3 Consider a twoperiod model for a small open economy Let Ct and Y; denote consumption and income for periods t = 1, 2. Let B2 denote the amount saved in period 1 and assume Bl = 0. Assume that the country can save or borrow as much as it wants at a given world interest rate 'r. The budget constraints are Cl = Y1 B2 and C2 = Y2 + (l + 7')Bz. (a) Using the budget constraints for periods 1 and 2 derive the intertemporal budget constraint. Interpret. (b) Assuming that the country wants to consume the same amount in both periods (Le. C1 = 02), nd an expression for CA1 in terms of Y1, Y2 and r only. What happens to CA1 if Y1 = Y2? Interpret. (c) Now suppose that we learn that both Y1 and Y2 increase but that the increase in Y2 exceeds the increase in Y1. Explain what happens to CA1 and why. 96:7\