In a Situation of Imperfect Short-Term Capital Mobility Between Countries

Multiple Choice

In a situation of imperfect short-term capital mobility between countries, if the BP curve Is flatter than the LM curve for country A, then an internal real sector shock in country A (such as an autonomous increase in real investment spending) will have a __________ Impact on A's national income under fixed exchange rates than under flexible exchange Rates; if the BP curve is steeper than the LM curve for country A, then that internal real Sector shock __________ impact on A's income under fixed exchange rates than under Flexible exchange rates.

A) larger; will have a smaller
B) larger; will also have a larger
C) smaller; will also have a smaller
D) smaller; will have a larger