During the Reagan era, 1981-1988, the U.S. current account moved from a tiny surplus to a large deficit. The following table provides U.S. macroeconomic data for that period.

a. Based on these data, to what extent would you attribute the changes in the U.S. current-account balance to a decline in the U.S. private savings-investment balance?

b. To what extent would you attribute the changes in the U.S. current-account balance to an increase in the U.S. government budget deficit?

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Year Private savings Private investment Government budget deficit Current-account balance 1980 1981 1982 500 586 617 468 558 503 -35 -30 -109 2 5 -11 1983 1984 1985 1986 1987 1988 641 743 736 721 731 802 547 719 715 718 749 794 -140 -109 -125 -147 -112 -98 -45 -100 -125 -151 -167 -129