Assume that the balance-of-payments accounts for a country are recorded correctly. Balance on the current account = BCA = $130 billion
Balance on the capital account = BKA = −$86 billion
Balance on the reserves account = BRA =?
The balance on the reserves account (BRA),under the fixed exchange regime is
A)−$44 billion
B)$44 billion
C)$216 billion
D)none of the options

Question

Quizplus · Accepted Answer

In a fixed exchange rate regime, the balance of payments must balance, meaning that the current account balance plus the capital account balance must equal zero. Therefore, we can calculate the balance on the reserves account using the formula:

BRA = -(BCA + BKA)

Substituting the given values, we get:

BRA = -(130 billion + (-86 billion)) = -$44 billion

Therefore, the correct answer is A) −$44 billion.

Assume That the Balance-Of-Payments Accounts for a Country Are Recorded