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:

Price Discrimination

A strategy for setting prices where the same or very similar products or services are offered at different prices by the same seller in various markets.

Pricing Scheme

A strategy or method used by businesses to set prices for their products or services, often designed to optimize profits, market share, or customer satisfaction.

Second-degree Price Discrimination

A pricing strategy where prices vary based on the quantity consumed or purchased, rather than customer characteristics, allowing sellers to capture more consumer surplus.

Consumer Surplus

The difference between the highest price a consumer is willing to pay for a good or service and the actual price they pay.