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Purchases and sales of financial and real assets result in a supply of or demand for a country’s currency in the same way as purchases Changes in official reserves occur when governments intervene in the foreign exchange markets to influence exchange rates. When exchange rates are truly flexible Since all entries in the balance of payments should collectively sum to zero, the balance of- payments accountant can determine the errors that were made. This With constant exchange rates, the correctly measured deficit/surplus in the current account equals the correctly measured surplus A country records its international finance acco