We consider two fictitious economies A and B with the following balance sheet on foreign assets and liabilities. Assets and liabilities are expressed in the countries domestic currency and their currency composition is written in parenthesis. For the whole exercise, GDP in domestic currency is constant in both countries. Country A Country B Suppose that the foreign currency appreciates by 10% over a year. c. What would be the NFA one year after if the countries had run a current account deficit of 2% of GDP over the period? Decompose the change in NFA over the period between the current account balance and the valuation effects on the NFA (all expressed in \% of GDP). We consider two fictitious economies A and B with the following balance sheet on foreign assets and liabilities. Assets and liabilities are expressed in the countries domestic currency and their currency composition is written in parenthesis. For the whole exercise, GDP in domestic currency is constant in both countries. Country A Country B Suppose that the foreign currency appreciates by 10% over a year. c. What would be the NFA one year after if the countries had run a current account deficit of 2% of GDP over the period? Decompose the change in NFA over the period between the current account balance and the valuation effects on the NFA (all expressed in \% of GDP)