One consequence of China operating a crawling peg is that China ________.
A)is accumulating U.S.dollar reserves
B)will eventually run out of foreign reserves, and the yuan will depreciate
C)will eventually run out of foreign reserves, and the yuan will appreciate
D)will become more competitive in the long run
E)none of the above

Question

Quizplus · Accepted Answer

China operates a crawling peg, which means that it is managing the exchange rate of its currency, the yuan, against a basket of other currencies. In order to maintain this exchange rate, China needs to buy and sell foreign currencies, which results in the accumulation of U.S. dollar reserves.

One Consequence of China Operating a Crawling Peg Is That