China chooses to have ________ and ________ and therefore,cannot have free capital mobility at the same time.

Question

Quizplus · Accepted Answer

China has chosen to maintain a fixed exchange rate (pegged to the US dollar) and independent monetary policy. This means that the central bank has control over interest rates and money supply, but it cannot freely adjust the exchange rate to respond to market forces. Free capital mobility would require a flexible exchange rate, but this would mean giving up control over monetary policy. Therefore, China cannot have both free capital mobility and its current combination of policies.

China Chooses to Have ________ and ________ and Therefore,cannot Have

China Chooses to Have and and Therefore,cannot Have