Describe the term- higher national income and interest rate

This causes country B to adjust to point B with both a higher national income and interest rate. At this point the foreign rate of interest is above the world rate of interest. Country B will, therefore, experience an incipient balance of payments surplus. At point B neither country has balance of payments equilibrium. This disequilibrium will induce further adjustment and spillover effects, the nature of which depends on the exchange rate regime between the two countries.