17) During the Vietnam War years the U.S. official reserves transaction balance

Question

17) During the Vietnam War years the U.S. official reserves transaction balance was negative and U.S. reserve assets declined. With the fixed exchange rate system during those years, the United States was able to run a deficit on current account because

foreign countries central banks accepted the U.S. currency as an international reserve.

it had an inexhaustible supply of gold reserves having discovered gold in California.

the capital account deficit compensated the current account deficit.

U.S. exports were expected to grow.

foreign countries central banks accepted the U.S. currency as an international reserve.

it had an inexhaustible supply of gold reserves having discovered gold in California.

the capital account deficit compensated the current account deficit.

U.S. exports were expected to grow.

Explanation / Answer

foreign countries central banks accepted the U.S. currency as an international reserve

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