An article on usatoday.com included the following two observations: First, “Chinese companies and individuals have begun to invest more heavily outside the country.” Second, “The yuan has dropped nearly 7 percent against the dollar so far this year. The Chinese government has responded by draining its foreign exchange reserves to buy yuan, hoping to slow the currency’s fall.”

a. Is there a connection between Chinese companies and individuals investing more heavily outside the country and the drop in the yuan? Briefly explain.
b. Why might the Chinese government want to slow the fall in the yuan?
c. Why would the Chinese government have to drain its foreign exchange reserves to slow the fall in the yuan?