If China Wished to Reduce Their Accumulation of Foreign Exchange

question 19

Multiple Choice

If China wished to reduce their accumulation of foreign exchange reserves they could:

• A) allow their currency, the yuan, to float freely in the market place.
• B) reduce their current account surplus by importing more goods than they export.
• C) undertake both of the activities identified in choices A and B.
• D) dig a big hole and bury the reserves.

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Definitions:

Mechanization

The process of introducing machines or automated equipment into manufacturing, agriculture, or other sectors to increase efficiency and production.

Rationalization

The process of replacing traditional and emotional thought with reason and practicality, often in reference to work processes or societal norms.

Moral Society

A community or society that abides by a set of moral principles or standards governing the behavior of its members.

Power Imbalances

Situations where there is an unequal distribution of power among individuals or groups, leading to dominance and subordination.