Which of the following is true under a pure flexible exchange rate regime? A)Balance of current account + Balance of capital account 0 B)Balance of current account + Balance of capital account

Question

Which of the following is true under a pure flexible exchange rate regime?
A)Balance of current account + Balance of capital account > 0
B)Balance of current account + Balance of capital account < 0
C)Balance of current account + Balance of capital account = 0
D)There is insufficient information to warrant any of the above answers

Quizplus · Accepted Answer

Under a pure flexible exchange rate regime, the balance of payments must balance. Therefore, the sum of the balance of the current account and the balance of the capital account is always equal to zero.

Which of the Following Is True Under a Pure Flexible