When China's central bank authorities acquire U.S.dollars faster than the Federal Reserve Bank acquires Chinese yuan,then the percentage change of U.S.international reserves :
A) decreases
B) increases
C) stays the same
D) increases first and then decreases.

Question

Quizplus · Accepted Answer

When China's central bank authorities acquire U.S. dollars faster than the Federal Reserve Bank acquires Chinese yuan, it means that China is selling more goods and services to the U.S. than it is buying. As a result, China's central bank will have more U.S. dollars than it needs to meet its domestic demand for imports from the U.S., so it will invest those dollars in U.S. financial assets. This means that China's U.S. dollar reserves will increase, while the U.S. international reserves of U.S. dollars will decrease. Therefore, the percentage change of U.S. international reserves will decrease.

When China's Central Bank Authorities Acquire U