Do poor countries run trade deficits? Consider again the two-period com economy. Suppose that initially the equilibrium has a zero trade deficit, and draw the Fisher diagram. Now, on the same diagram, draw the production possibilities frontier for an economy with the same preferences but half the productive capacity. That is, for each point on the original production possibilities frontier, the new production possibilities frontier has a corresponding point with half the Period 1 net output and half the Period 2 output. Draw the new equilibrium, with the new point of tangency with an indifference curve. Is there a trade deficit in the new equilibrium? Why or why not? If the answer is ambiguous, what assumptions could you make to provide an definitive answer? Your explanation is as important as the diagram.