How might China benefit from adopting a flexible exchange rate ...

[tiffannnnyyyyyy]

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]

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