In the Monetary Approach to the Balance of Payments, Under

Multiple Choice

In the monetary approach to the balance of payments, under flexible exchange rates, an Increase in the proportion of income that people in country A wish to hold as money Would, other things equal, lead to an __________ in country A's balance of payments and Therefore to __________ of A's currency in the foreign exchange markets.

A) incipient surplus; a depreciation
B) incipient surplus; an appreciation
C) incipient deficit; a depreciation
D) incipient deficit; an appreciation