Can you suggest where is the world interest rate in the economy which has a positive current account and a financial account surplus, fixed exchange rate and relative capital immobility? The graph of this should look like this: pic Since NX and FA are positive, BP line is righter than the intersection of IS and LM curves, so $i_0$ is the country's interest rate, but what is the world's one?

  • $\begingroup$ What is the BP line? $\endgroup$ – Brennan Apr 19 at 7:21
  • $\begingroup$ BP = BOP (Balance of payment) = NX + FA $\endgroup$ – student Apr 19 at 7:26

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