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7.2. In an IS-LM framework there are two (2) adjustment phases and the BP curve plays an important role in the adjustment process. With reference to the statement above, illustrate with an applicable diagram (draw the diagram) what the balance of payments (BoP) adjustment process will be if there is a surplus on the Bop. Tip: On the diagram, indicate the changes in the IS, LM and IS curves, at which point there will be a surplus on the BoP and where internal and external equilibrium will be after the adjustment process. 7.3 With reference to the diagram in Question 7.2, briefly discuss the two exchange rate effects that will occur under the circumstances of a surplus on the balance of payments