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1. How do a country's current account and financial account balances affect its net foreign assets? If country A has greater net foreign assets per citizen than does country B, is country A necessarily better off than country B? 2. In a world with two large open economies, what determines the world real interest rate? What relationship between the current accounts of the two countries is satisfied when the world real interest rate is at its equilibrium value? 3. Under what circumstances will an increase in the government budget deficit affect the current account balance in a small open economy? In the cases in which the current account balance changes, by how much does it change? What is the connection between the government budget deficit and the current account balance