In response to the Covid-19, the Fed, United States' central bank, started printing large quantities of US dollars, what would you expect the movement of the exchange rate between of the US dollar and Chinese Yuan? Explain. [4 marks]

b. Suppose that during one period, the velocity of money is constant and during another period, it undergoes large fluctuation. During which period will the quantity theory of money be more useful in explaining changes in the inflation rate? Explain.

[8 marks]

Differentiate policy tools a country's central bank uses to decrease the money supply.

[12 marks]

NotePlease answer according to the score