If the capital is perfectly immobile due to restrictions,then the BP curve is:
A) Horizontal
B) Vertical
C) Downward-sloping
D) Upward-sloping

Question

Quizplus · Accepted Answer

If the capital is perfectly immobile, the BP (balance of payments) curve will be vertical. This is because any change in the interest rate will not affect capital flows, and thus any change in the interest rate will result in an equal and opposite change in the exchange rate, leaving the current account balance unchanged.

If the Capital Is Perfectly Immobile Due to Restrictions,then the BP