Question

How do central banks influence exchange rates?

		Purchase foreign assets to attempt to depreciate their exchange rate.
		Sell foreign assets to attempt to appreciate the exchange rate.
		Some banks refrain from intervening at all in exchange rates.
		Some banks attempt to hold their exchange rate at a fixed value.
		All of the above.

What is the exchange rate policy of the Chinese central bank?

		The Chinese bank is active in managing the exchange rate of the yuan with the dollar.
		The Chinese bank attempts to keep the yuan fixed to the dollar or slightly appreciating.
		The Chinese bank is active in manipulating their currency relative to the dollar.
		All of the above reflect the Chinese central bank s exchange rate policy.

Answer 1

a) "E"

All of the given options are correct. Selling foreign assets appreciate the exchange rate and buying depreciate it. Some banks do not interfere in the exchange market and some manipulate it.

b) "D"

All the above reflects the Chinese central bank's exchange rate policy.