Chapter 10, Problem 44P

Imagine that the U.S. economy finds itself in the following situation: a government budget deficit of $\$\text{1}00$ billion, total domestic savings of $\$\text{1},\text{5}00$ billion, and total domestic physical capital investment of $\$\text{1},\text{6}00$ billion. According to the national saving and Investment Identity, what will be the current account balance? What will be the current account balance if Investment rises by $\$\text{5}0$ billion, while the budget deficit and national savings remain the same?