Consider a two-period small open endowment economy populated by a large number of house-holds with p

Consider a two-period small open endowment economy populated by a large number of house-holds with preferences described by the lifetime utility functionC1101 C1112 ,where C1 and C2 denote, respectively, consumption in periods 1 and 2.Suppose that householdsreceive exogenous endowments of goods given by Q1 = Q2 = 10 in periods 1 and 2, respectively.Every household enters period 1 with some debt, denoted B?0 , inherited from the past.Let B?0be equal to ?5.The interest rate on these liabilities, denoted r0, is 20 percent.Finally, supposethat the country enjoys free capital mobility and that the world interest rate on assets heldbetween periods 1 and 2, denoted r?, is 10 percent.(a) Compute the equilibrium levels of consumption, the trade balance, and the currentaccount in periods 1 and 2.