The Use of Expansionary or "Easy" Fiscal Policy by a Country's

Multiple Choice

The use of expansionary or "easy" fiscal policy by a country's government in a situation of fixed exchange rates will, other things equal, initially lead to __________ of the country's current account balance (or trade balance) ; if short-term financial capital is relatively mobile between countries (i.e., the BP curve is flatter than the LM curve) , the policy initially __________ of the country's capital/financial account balance.

A) an improvement; also leads to an improvement
B) an improvement; leads to a deterioration (or worsening)
C) a deterioration (or worsening) ; leads to an improvement
D) a deterioration (or worsening) ; also leads to a deterioration (or worsening)