Question: Explain if the following statement is true or false: In the two-country period model reviewed in class, the response of the Current Account to a

Explain if the following statement is true or false:"In the two-country period model reviewed in class, the response of the Current Account to a PERMANENT positive INCOME shock is SMALLER than its response to a TEMPORARY positive INCOME shock."

Use equations to support your answer. For simplicity assume a logarithmic life time utility (U=ln(C₁)+ln(C₂)):

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