If, in the IS/LM/BP Diagram in a Situation Where Short-Term

Multiple Choice

If, in the IS/LM/BP diagram in a situation where short-term capital is imperfectly mobile Internationally and a flexible exchange rate system exists, an incipient balance-of- Payments (official reserve transactions) surplus will cause the BP curve to shift__________ and the IS curve to shift __________.

A) upward and to the left; downward and to the left
B) upward and to the left; upward and to the right
C) downward and to the right; downward and to the left
D) downward and to the right; upward and to the right