From an Initial Equilibrium Position for the Economy (At the Three-Way

Multiple Choice

From an initial equilibrium position for the economy (at the three-way intersection of the IS, LM, and BP curves) , and if the LM curve is steeper than the BP curve, expansionary fiscal policy initially leads to a balance-of-payments (BOP) __________, and expansionary monetary policy __________.

A) deficit; also initially leads to a BOP deficit
B) deficit; initially leads to a BOP surplus
C) surplus; initially leads to a BOP deficit
D) surplus; also initially leads to a BOP surplus