Under fixed exchange rate system

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Under a fixed exchange rate system, the government bears the responsibility to ensure that the Balance of Payments is near zero. If the sum of the current and capital accounts do not approximate zero, the government is expected to intervene in the foreign exchange market by buying or selling official foreign exchange reserves. If the sum of the current and capital accounts is LESS THAN ZERO what action does the government need to take in order to preserve the fixed exchange rate?

Reference no: EM133227674

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