Determine the effect on currency

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Reference no: EM1367213

Venezuela had considerable capital outflows after election of Hugo Chavez. If Venezuela had fixed exchange rates, determine what effect would these flows have had on Venezuela's overall balance and value of the Bolivar (the Venezuelan currency)?

A. Overall balance would not change and value of the Bolivar would fall

B. Overall balance would fall and value of the Bolivar would fall

C. Overall balance would rise and value of the Bolivar would fall

D. Overall balance would fall and value of the Bolivar would not change

Reference no: EM1367213

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