China Fixes Its Exchange Rate (Yuan Per Units of Foreign

question 114

Multiple Choice

China fixes its exchange rate (yuan per units of foreign currency) at a rate above its free-market equilibrium level.In order to maintain this exchange rate,and to prevent its currency from ________,the Chinese central bank must be accumulating ________.

• A)appreciating; foreign-exchange reserves
• B)appreciating; reserves of its domestic currency
• C)depreciating; foreign-exchange reserves
• D)depreciating; reserves of its domestic currency
• E)depreciating; U.S.dollars

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Definitions:

Submucosal Layer

The layer of tissue lying just beneath the mucosa, containing blood vessels, nerves, and glands, found in various tubular structures in the body.

Mucus

A sticky, slimy substance produced by mucous membranes and glands for protection and lubrication in the body, such as in the respiratory and digestive tracts.

Skeletal Muscle

A type of muscle that is attached to bones and under voluntary control, responsible for locomotion and movement.

Digestive Tract

A continuous tube running through the body from mouth to anus, where digestion and absorption of food occur.