Consider an open economy that is in a process of adjustment to some exogenous shock/shocks and currently is at point B while initially it was in A [the BP curve didn't change] with

NX (A)> 0. Comment on2:

(I) current account balance at B;

(II) financial capital account balance at fi:

(ill) the current situation at the foreign exchange market (the one that corresponds to point B).

I

Transcribed Image Text:

A BP B Y A BP B Y

Answer rating: 100% (QA)

From the above diagram we can figure out that the BP curve indicates the current transaction of the ... View the full answer