If there are no reserves,domestic adjustments to payment imbalances under fixed exchange rates require surplus countries to forsake full employment and deficit countries to forsake price stability.
If there are no reserves,domestic adjustments to payment imbalances under fixed exchange rates require surplus countries to forsake price stability and deficit countries to forsake full employment.

Question

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Under fixed exchange rates, surplus countries may need to forsake price stability to maintain their currency peg, while deficit countries may need to forsake full employment to correct imbalances without reserves.

If There Are No Reserves,domestic Adjustments to Payment Imbalances Under