One World View article,"Analysis: China's $3 Trillion in Reserves More Bane Than Boon," states that

Question

Quizplus · Accepted Answer

The article states that China's reserves of dollars can cause inflation in China. Inflation is caused by an increase in the money supply in relation to the supply of goods, and China's large reserves can potentially increase the money supply and cause inflation. Option A is incorrect because the article does not mention anything about deflation caused by the reserves. Option B is incorrect because the article does not mention anything about the overvaluation of the yuan in relation to the trade imbalance. Option D is incorrect because the article does not mention anything about the undervaluation of the dollar.

One World View Article,"Analysis: China's $3 Trillion in Reserves More