Under a Flexible-Rate System, When the BP Curve Is Flatter

question 7

Multiple Choice

Under a flexible-rate system, when the BP curve is flatter than the LM curve, an Autonomous increase in foreign interest rates will have what impacts on the domestic Interest rate and domestic national income?

• A) domestic interest rate will increase, domestic national income will decrease
• B) domestic interest rate will increase, domestic national income will not change
• C) domestic interest rate will increase, domestic national income will increase
• D) domestic interest rate will not change, domestic national income will decrease

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Definitions:

Archaea

A domain of single-celled microorganisms that are distinct from bacteria and eukaryotes, often found in extreme environments.

Mitochondria

Organelles found in the cells of nearly all eukaryotic organisms, responsible for producing energy through the process of oxidative phosphorylation.

Chloroplasts

Organelles found in plant and algal cells where photosynthesis takes place, converting light energy into chemical energy stored in glucose.