Assume that the FE curve is flatter than the LM curve. A negative external capital-flow shock shifts the FE curve left. Under zero sterilization, which one of the following will happen next?
A.
Because of the incipient balance of payments deficit, LM curve will shift leftward
B.
Because of the incipient balance of payments surplus, LM curve will shift rightward
C.
Because of the incipient balance of payments deficit, IS curve will shift rightward
D.
Because of the incipient balance of payments surplus, IS curve will shift leftward