Under a Flexible-Rate System, When the BP Curve Is Flatter

Multiple Choice

Under a flexible-rate system, when the BP curve is flatter than the LM curve, an Autonomous increase in foreign interest rates will have what impacts on the domestic Interest rate and domestic national income?

A) domestic interest rate will increase, domestic national income will decrease
B) domestic interest rate will increase, domestic national income will not change
C) domestic interest rate will increase, domestic national income will increase
D) domestic interest rate will not change, domestic national income will decrease