Within a fixed exchange rate system, the effect of an expansionary fis

Within a fixed exchange rate system, the effect of an expansionary fiscal policy action on the balance of payments will be to

a. worsen the balance on the capital account but improve the trade balance.
b. worsen the trade balance but improve the balance on the capital account.
c. worsen both the trade balance and the balance on the capital account.
d. improve both the trade balance and the balance on the capital account.

ANSWER

C