Suppose at time t=1, government purchases =0, Taxes =0, that GNP1 = 1000, that consumption C1=700 and investment I1 = 500 and that the countrys foreign debt D1 =0

1. derive the value of net exports NX1 (X_M), and national savings (show all your work)

2. What is the approximate value of the financial account + the capital account? Following from the scenario above, assume that the current account deficit are financed by borrowing abroad at 10% interest rate. Suppose at time t=2, the government purchases =0, GNP2 =980, C2 =700 and I2 = 500.

3. Based on GNP2, derive the value of, National Savings S2, net exports NX2 , and current account CA2 and debt D2