How businesses and consumers prefer to carry out transaction

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Reference no: EM131023191

Friedrich Schneider, an economist at the Johannes Kepler University of Linz in Austria, made the following observation about China: "The average Chinese trusts neither the Chinese banks nor the Communist Party."

a. If Schneider is correct, how might businesses and consumers prefer to carry out transactions?

b. The Chinese government has refused to print currency in denominations higher than the 100-renminbi note, which is the equivalent of about $16. The United States prints $100 bills and all other countries print currency in denominations that are at least that high. Given your answer to part (a), why might the Chinese government be reluctant to print currency in high denominations?

Reference no: EM131023191

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