If a Country's BP Curve Is Flatter Than Its LM

Multiple Choice

If a country's BP curve is flatter than its LM curve, then an external financial shock of a rise in interest rates abroad would, under flexible exchange rates, lead to __________ in The home country's national income. If exchange rates were fixed, this external financial shock would __________ in the home country's national income.

A) a decrease; lead to an increase
B) a decrease; also lead to a decrease
C) an increase; also lead to an increase
D) an increase; lead to a decrease