Under the fixed exchange rate regime,
A)the combined balance on the current and capital accounts will be equal in size,but opposite in sign,to the change in the official reserves.
B)the balance on the current and capital accounts will be equal in size,but opposite in sign.
C)a current account surplus or deficit must be matched by an official reserves deficit or surplus.
D)a capital account surplus or deficit must be matched by an official reserves deficit or surplus.

Question

Quizplus · Accepted Answer

Under a fixed exchange rate regime, the central bank intervenes to maintain the exchange rate, so any imbalance in the current and capital accounts is offset by changes in official reserves.

Under the Fixed Exchange Rate Regime