Article Summary
In an effort to decrease an outflow of capital which has threatened to extend the country's economic slowdown,China's central bank sold $94 billion U.S.dollars in an attempt to support its currency,the yuan.The move followed the largest devaluation of the yuan in more than 20 years.According to analyst Li Miaoxian,"If the central bank continues its intervention,China's foreign-exchange reserves will continue to shrink -- the heavier the intervention,the deeper the fall.It's "inevitable" the nation will see continuous capital outflows and yuan depreciation pressure in the coming months.Over the past decade,the Chinese central bank had purchased dollars in an effort to stem the appreciation of the yuan during a period of a growing trade surplus.Now facing an increasing sell-off of the yuan,Bloomberg economists note that "The fear is that today's data will reinforce the market view that the only way for the yuan to go is down,and further accelerate capital outflows."
-Refer to the Article Summary.All else equal,a depreciation of the Chinese yuan relative to a currency such as the U.S.dollar should ________ the current account balance in China and therefore ________ the financial account balance in China.
A) increase;increase
B) increase;decrease
C) decrease;increase
D) decrease;decrease
Correct Answer:
Verified
Q141: If the dollar appreciates,how will aggregate demand
Q142: Holding all else constant,a rise in interest
Q150: Holding all else constant,an economic expansion in
Q151: If a country has a _ exchange
Q153: Which of the following will shift the
Q154: When Americans decrease their demand for Japanese
Q157: An increase in capital inflows will
A)increase net
Q158: If the exchange rate changes from $0.08
Q159: Assuming no change in the nominal exchange
Q160: Assuming the United States is the "domestic"
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents