Describe the balance-of-payments identity and discuss its implications under the fixed and flexible exchange rate regimes.

Question:

Describe the balance-of-payments identity and discuss its implications under the fixed and flexible regimes.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...