Question: II 50, show why. Question 3 (20pts) Using the two periods model of the current account presented in class, explain the effects of a decrease

II 50, show why. Question 3 (20pts) Using the two periods model of the current account presented in class, explain the effects of a decrease in the interest rate on consumption, trade balance, and the current account of each period. Consider both the case of a "borrower" and a "lender". Your graph should show both the income and the substitution effect. Please make sure to label the axes, endowment point, and consumption bundles. Missing labels will result in points losses. II 50, show why. Question 3 (20pts) Using the two periods model of the current account presented in class, explain the effects of a decrease in the interest rate on consumption, trade balance, and the current account of each period. Consider both the case of a "borrower" and a "lender". Your graph should show both the income and the substitution effect. Please make sure to label the axes, endowment point, and consumption bundles. Missing labels will result in points losses

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