In a pure flexible exchange rate regime, a country's central banks will not need to maintain official reserves. Under this regime
A)-BCA = BKA.
B)BCA = -BRA = 0.
C)BKA = -BRA.
D)BSA = BCA.

Question

Quizplus · Accepted Answer

In a pure flexible exchange rate regime, the balance of capital account (BKA) will equal the balance of current account (BCA) because the exchange rate adjusts to ensure that the sum of the current and capital accounts is zero, eliminating the need for official reserves.

In a Pure Flexible Exchange Rate Regime, a Country's Central