A nation running a persistent balance of payments surplus while part of a fixed exchange rate system would be required to __________ international reserves in an effort to prevent its currency from __________.
A) amass; appreciating
B) amass; depreciating
C) pay out; appreciating
D) pay out; depreciating

Question

Quizplus · Accepted Answer

In a fixed exchange rate system, a nation with a balance of payments surplus would accumulate international reserves as it sells its own currency to buy foreign currency to maintain the fixed exchange rate, thereby preventing its currency from appreciating.

A Nation Running a Persistent Balance of Payments Surplus While