In the Diagram Below, Under Flexible Exchange Rates, This Country

question 27

Multiple Choice

In the diagram below, under flexible exchange rates, this country has an incipient Balance-of-payments (official reserve transactions) __________; as a consequence, the BP curve will shift __________.

• A) surplus; upward and to the left
• B) surplus; downward and to the right
• C) deficit; upward and to the left
• D) deficit; downward and to the right