Answer:
The current account balance goes from a $200 deficit, to a $100 surplus.
Explanation:
There are several ways to write the national saving and investment identity. We can choose to write it in this way:
(X - M) = S + (T - G) - I
Because the equation is an identity, we know that the left side of it (X - M) will always be equal to the right side (S + (T - G) - I), on which we wil be focusing.
With the initial values provided by the question, we have the following situation:
(X - M) = $200 + $900 - $1,300
(X - M) = $1,100 - $1,300
(X - M) = -$200
Thus, we have a deficit of $200
If investment decreases by $300, while the government budget, and savings remain the same, the situation changes:
(X - M) = $200 + $900 - $1,000
(X - M) = $1,100 - $1,000
(X - M) = $100
So now we have a surplus of $100
