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Author Question: How might China benefit from adopting a flexible exchange rate policy? What will be an ideal ... (Read 439 times)

tiffannnnyyyyyy

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on: Jun 30, 2018
How might China benefit from adopting a flexible exchange rate policy?
 
  What will be an ideal response?

Question 2

The primary assets of the Fed are
 
  A) discount loans and reserves.
  B) discount loans and government securities.
  C) government securities and reserves.
  D) discount loans and open market operations.


patma1981

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Reply #1 on: Jun 30, 2018
Answer to Question 1

With a flexible exchange rate, China can stop adding to its reserve of low-yielding U.S. assets. Strengthening of the yuan will reduce inflationary pressures and, perhaps, reduce conflicts over trade policies with other nations. With a flexible exchange rate, China can relax its capital controls while retaining its independent monetary policy.

Answer to Question 2

B


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