This is a very odd English sentence. I feel like someone on duolingos side wanted to use the word for scissors (nożyczki) which means, literally 'little knives'
Well, the Polish one is no better – sounds as she might be related to this fellow:
Seriously though, I have problems with finding a context in which this sentence wouldn't sound so unnatural… Plural knives make it hard, because you usually only use one at a time. Scissors would indeed solve the problem, but very few people use scissors to cut bread, as far as I know. ;-) In theory it could work as a demonstrative, when pointing toward knives, but personally I would rather use "Ona używa tamtych noży do krojenia chleba" in such case…
Definitely not the best sentence in this course, in my opinion. ;-)
Now that I read this again, I have a case for you where indeed, scissors are used to cut bread: I use kitchen sheers to snip slices of bread in half every morning for making toast. Admittedly though: Very edge case
Polish sentence makes a bit sence- those are the knifes she uses to cut the bread. But I think It would require "she cuts" in English.
Nowhere. If you use something (cut with a knife), you just use the instrument in Instrumental without any preposition.
Translating "with" as "z" would create a sentence where she cuts the bread together with the knives. It would personify the knives.
In English it is rare that we use the word "carving" when the action is to cut up food.
The only exception to that is that we may ask another family member to carve up the meat. This may be beef, or turkey, for example. And would only tend to be used at a more formal family gathering. Though it is equally likely these days that we would would use the word to "cut" up the meat even in those situations.
"Carving" is used more commonly for the action of when you are creating an art work. So there is, for example, an art form that specializes in the art of carving food.
Mostly it specializes in carving vegetables.
You can check out some examples of this here on pinterest
Mostly though you would use it if you were carving an artwork in wood, or say, sand stone, etc.
That's perfectly reasonable. But, "carving" is a uncommon expression for that act. Usually reserved for Thanksgiving Turkey. You have my vote.