In the article on China holding $3 trillion in dollars,for every dollar it holds in reserves,it prints

Question

Quizplus · Accepted Answer

When China holds dollars in reserve, it needs to print yuan to buy those dollars in the foreign exchange market. The current exchange rate is approximately 6.5 yuan per dollar, so for every dollar China holds in reserves, it would need to print approximately 6.5 additional yuan for the domestic money supply. This is to maintain the stability of the exchange rate and ensure there is enough domestic currency in circulation to support economic activity. Therefore, option B) is the correct answer.

In the Article on China Holding $3 Trillion in Dollars,for