If a Country's BP Curve Is Upward-Sloping (I

question 5

Multiple Choice

If a country's BP curve is upward-sloping (i.e., it is neither vertical nor horizontal) , then An intersection of the country's IS and LM curves at a point above the BP curve will be Associated with __________ in the country's balance of payments. With flexible Exchange rates, the country's BP curve will consequently shift __________.

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

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Definitions:

Slope

The measure of the steepness or incline of a line or surface, typically described as a ratio of vertical change to horizontal change.

Budget Line

An illustration showing all the combinations of two items that can be bought given certain prices and a specified budget.

Price

The amount of money expected, required, or given in payment for something; it acts as a signal for scarcity or abundance of a product.

Budget Line

A depiction showcasing all feasible combinations of two articles that can be purchased, provided there's a fixed budget and the prices remain the same.