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:

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Acid

Commonly refers to lysergic acid diethylamide (LSD), a powerful hallucinogenic drug.

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Individuals undergoing the period of adolescence, typically between the ages of 13 and 19, characterized by physical, psychological, and social development.

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A period of rest occurring in a 24-hour cycle, typically characterized by inactivity and reduced consciousness where the body can recover and repair.