China Holds a Massive Amount of Foreign Exchange Reserves

question 22

Multiple Choice

China holds a massive amount of foreign exchange reserves. As of 2010 they held nearly $2,500 billion. This huge foreign exchange reserve should allow China to

• A) manage the value of the Chinese yuan to maintain competitiveness in world markets.
• B) maintain a relatively stable managed fixed exchange rate for the yuan for years to come.
• C) remain a very important player in world trade for at least the next several years.
• D) All of the above.

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Definitions:

Supervisory Costs

Expenses related to the oversight and management of employees or production processes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, useful for planning and controlling costs.

Responsibility Reports

Financial reports that measure the performance of departments and managers within an organization, emphasizing accountability.

Investment Center

A business unit or division that is responsible for its own revenues, expenses, and assets, and is evaluated based on its return on investment.