In August 2015 investor sentiment shifted against the Chinese yuan. Investors sold the yuan and bought dollars, as financial capital flowed out of China, seeking better rates of return in other countries. What actions did China take in response to this situation?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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In August 2015 investor sentiment shifted against the Chinese yuan. Investors sold
the yuan and bought dollars, as financial capital flowed out of China, seeking better
rates of return in other countries. What actions did China take in response to this
situation?
O China used $1 trillion of its foreign exchange reserves to purchase the yuan in an attempt to
prevent further devaluation and tightened capital controls on financial outflows.
O China loosened capital controls to encourage forcign investment into the Chinese economy.
O China sold the yuan to encourage further depreciation in an attempt to improve its trade
deficit.
China's monetary authority sold tie yuan in an attempt to orevent fürther devaluation and
raised interest rates to stem the outflow of forcige capital.
Transcribed Image Text:In August 2015 investor sentiment shifted against the Chinese yuan. Investors sold the yuan and bought dollars, as financial capital flowed out of China, seeking better rates of return in other countries. What actions did China take in response to this situation? O China used $1 trillion of its foreign exchange reserves to purchase the yuan in an attempt to prevent further devaluation and tightened capital controls on financial outflows. O China loosened capital controls to encourage forcign investment into the Chinese economy. O China sold the yuan to encourage further depreciation in an attempt to improve its trade deficit. China's monetary authority sold tie yuan in an attempt to orevent fürther devaluation and raised interest rates to stem the outflow of forcige capital.
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