Question: Using the two periods model of the current account presented in class, explain the effects of a decrease in the interest rate on consumption,

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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