In a two-period case, a country's present value of _____ from year 1 should be equal to the present value of _______.
A) trade balance; trade balances of the next two years
B) wealth; trade balances for the next four years
C) wealth; trade balances for the next two years
D) trade balance; wealth for the next two years

Question

Quizplus · Accepted Answer

In a two-period case, the country's present value of wealth from year 1 should be equal to the present value of trade balances for the next two years. This is because wealth is a measure of a country's overall economic well-being, which is influenced by its trade balance. As such, the two are closely related and can be used as a proxy for each other in this context. The other options do not accurately reflect this relationship or the time frame being considered.

In a Two-Period Case, a Country's Present Value of _____