The IS/LM/BP Analysis Suggests That an External Real Sector Shock

question 11

Multiple Choice

The IS/LM/BP analysis suggests that an external real sector shock, such as a rise in national income abroad will cause, under fixed exchange rates, a __________ shift in a Home country's BP curve (assuming that short-term financial capital is not perfectly Mobile) , a __________ in the home country's balance of payments, and __________ in The home country's national income.

• A) rightward; surplus; an increase
• B) rightward; deficit; a decrease
• C) rightward; surplus; a decrease
• D) leftward; deficit; a decrease