Question
A country has a current account balance of -$30bn and a capital and financial account balance (excluding official transactiosn by the central bank) of +$40bn.
A country has a current account balance of -$30bn and a capital and financial account balance (excluding official transactiosn by the central bank) of +$40bn. Assuming there are no errors and omissions in the balance of payments accounts, the central bank of this country must have
1.purchased $10bn worth of its own currency on the foreign excange market, and made additional to foreign currency reserves.
2.used $10bn of foreign exchange reserves to make sales of its own currency on the foreign excahnge market.
3.used $10bn of foreign exchange reserves to make purchases of its own currency on the foreign excahnge market.
4.sold $10bn worth of its own currency on the foreign excange market, and made additional to foreign currency reserves.
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