1. What are the implications of other nations acquiring a large amount of U.S. Treasury bills on the U.S. exchange rates? If China did this would it increase their military position in Asia? If you were in Congress, how would you negotiate trade agreements to mitigate against adverse consequences?
2. Compare the risks of borrowing in the form of debt and receiving FDI in the form of equity. If debt is generally considered more risky to borrowers than equity, why is so much borrowing by foreign nations in the form of debt rather than equity?
Provide a 250 word answer to each of these questions.