Antarctica uses a system of fixed exchange rates, its current account
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Antarctica uses a system of fixed exchange rates, its current account

2. Antarctica uses a system of fixed exchange rates, its current account deficit is $6 billion, and its capital account balance is $4 billion. Based on this information, answer the following questions.

Required:

(a) What is the change in the official foreign exchange reserves of Antarctica?

(b) What is the gap between the income of Antarctica and its expenditure on domestic output?

(c) If there is only one other country in the world, Greenland, can you estimate the current account balance of Greenland? 

Hint
Accounts & Finance"Since Antarctica uses a fixed exchange rate system, any deficit in the current account must be offset by an equal surplus in the capital account, and vice versa. Therefore, the change in the official foreign exchange reserves of Antarctica would be zero.Current account deficit = $6 billionCapital account surplus = $4 billionChange in foreign exchange reserves = Capital accou...
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