Under a Fixed Exchange Rate, a Balance-Of-Payments Surplus for a Country

Multiple Choice

Under a fixed exchange rate, a balance-of-payments surplus for a country will lead to a __________ in the money supply as the country's central bank __________ in order to maintain the fixed exchange rate.

A) rise; purchases domestic currency
B) rise; purchases foreign exchange
C) fall; sells domestic currency
D) fall; sells foreign exchange