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.

Question

Quizplus · Accepted Answer

By allowing their currency to float freely and importing more goods than they export, China can reduce their current account surplus and decrease the demand for their currency, leading to a reduction in foreign exchange reserves. Implementing both options can create an effective balance for reducing their accumulation of foreign exchange reserves. Option D is not a viable choice.

If China Wished to Reduce Their Accumulation of Foreign Exchange