Between the year 2001 and 2006, China bought more than $250 billion in U.S.Treasury bonds.Such purchases:
A)ensures that China's currency is relatively weak compared to the U.S.dollar.
B)indicate that China is not sure of its economic viability.
C)show that the currency exchange rate is unpredictable.
D)predict that yuan will be devalued in the near future.
E)indicate that China's currency is stronger than the U.S.dollar.

Question

Quizplus · Accepted Answer

By buying U.S. Treasury bonds, China increases its holdings of U.S. dollars, which in turn strengthens the dollar and makes the Chinese yuan weaker in comparison. This helps China's export-oriented economy by making its goods more affordable and attractive in foreign markets.

Between the Year 2001 and 2006, China Bought More Than