Imagine that Wally Land finds itself in the following situation: a government budget deficit of $900; total domestic savings of $2,000, and total domestic physical capital investment of $1,300. According to the national saving and investment identity, what is the current account balance?    There is 2,000 – 1,300 = $700 more savings than investment, but since the government needs $900 the country must import $200 of financial capital so it has current account deficit of $200

A) deficit of $200

B) surplus of $200

C) deficit of $900

D)  surplus of $900

Answer rating: 100% (QA)

Initial budget deficit900 Initial total domestic savings2000 I... View the full answer