4. Suppose that next year the Congress cuts taxes by $200 billion and cuts government spending by $400 billion. They believe that this will increase economic growth, so that next year businesses will increase investment by $100 billion, and people will save $300 billion more. Assume that in the current year we have a $500 billion trade deficit.

A. (15) Given these changes, how will the trade deficit change during the next year (show calculations)?

B. (5) Will we have a trade deficit or surplus next year, and how much will it be?