Prices,interest rates,and income are the automatic adjustment variables that help restore current-account equilibrium under a system of fixed exchange rates.

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Prices, interest rates, and income are the three variables that can adjust to restore current-account equilibrium under a fixed exchange-rate system. In this system, the exchange rate is fixed, which means that the central bank must intervene in the foreign exchange market to maintain the exchange rate target. If there is a trade deficit, the automatic adjustment process will cause a decrease in the demand for the country's goods and services, which should reduce import demand and increase export demand, thus restoring equilibrium. This adjustment process involves changes in relative prices, income, and interest rates.

Prices,interest Rates,and Income Are the Automatic Adjustment Variables That Help