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China has begun to allow gradual changes in the RMB/dollar rate since 2005. There are still observers believed the RMB is undervalued. Which of the following statement is true holding other things constant? A. By fixing exchange rate, China has given up the monetary policy. B. By fixing exchange rate, China has restricted capital flows. C. By allowing exchange rate to flow, China Solution It is the indirect export subsidy which lowers the price of chinese goods imported in US. This is done by allowing exchange rates to flow as per the currency market sentiments and other demand and supply factors. So the answer would be C..

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China has begun to allow gradual changes in the RMB/dollar rate since 2005. There are still observers believed the RMB is undervalued. Which of the following statement is true holding other things constant? A. By fixing exchange rate, China has given up the monetary policy. B. By fixing exchange rate, China has restricted capital flows. C. By allowing exchange rate to flow, China Solution It is the indirect export subsidy which lowers the price of chinese goods imported in US. This is done by allowing exchange rates to flow as per the currency market sentiments and other demand and supply factors. So the answer would be C.

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  • 1. China has begun to allow gradual changes in the RMB/dollar rate since 2005. There are still observers believed the RMB is undervalued. Which of the following statement is true holding other things constant? A. By fixing exchange rate, China has given up the monetary policy. B. By fixing exchange rate, China has restricted capital flows. C. By allowing exchange rate to flow, China Solution It is the indirect export subsidy which lowers the price of chinese goods imported in US. This is done by allowing exchange rates to flow as per the currency market sentiments and other demand and supply factors. So the answer would be C.