In a two-period example of intertemporal trade, if NX 0 in period 1, then for trade to balance in period 2:

Question

In a two-period example of intertemporal trade, if NX > 0 in period 1, then for trade to balance in period 2:

Quizplus · Accepted Answer

If NX > 0 in period 1, it means that the country has exported more than it has imported. This leads to an accumulation of foreign assets. To balance trade in period 2, the country needs to reduce its net exports, which means importing more than it exports. Therefore, NX < 0 in period 2.

In a Two-Period Example of Intertemporal Trade, If NX >