True or False: With Explanation

(20 points) Suppose that there is an asymmetric permanent shock to the endowments in a two-period economy. In particular, assume that the new endowments are equal to Qi = Q1 + 6 and Q; = Q2 + 6(1 + 1"\"), where Q1 and Q2 are the endowments before the shock. Assume that 6 0, and that 35 a 0. Use the logarithmic model of chapter 3 (U = log(Cl)+log(02)) to explain if the following statement is true or false: \"With this asymmetric permanent shock to the endowments, the change in consumption in period-1 is equal to 6, the change in consumption in period 2 is equal to 6(1 + 1"\"), and the change in the trade balance in the rst period AND the change current account in the rst period are both negative.\" Do not forget to show step by step your algebraic calculations and a graph to support your answer. Explain in detail your reasoning. No credit without an explanation