Question: Can you show me the step by step process to determine why a is the correct answer? A country finds itself in the following situation:

Can you show me the step by step process to determine why "a" is the correct answer?

A country finds itself in the following situation: a government budget deficit of $900; total domestic savings of $200, and total domestic physical capital investment of $1300. According to the national saving and investment identity, if investment decreases by $300 while the government budget deficit and savings remain the same, what will happen to the current account balance? a. $200 deficit changes to $100 surplus b. surplus increases from $200 to $500 X c. $200 surplus changes to $100 deficit d. deficit decreases from $900 to $600

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