China Fixes Its Exchange Rate (Yuan Per Units of Foreign

question 77

Multiple Choice

China fixes its exchange rate (yuan per units of foreign currency) at a rate above its free-market equilibrium level,which means that China is keeping the external value of the yuan

• A)artificially high.
• B)at its free-market price.
• C)at the rate established by its trading partners.
• D)artificially low.
• E)in line with the world market for foreign currency.

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Definitions:

Quantity Demanded

The amount of a good or service that consumers are willing and able to purchase at a specific price.

Physicals

Refers to physical commodities or assets, as opposed to financial instruments or derivatives, that are traded or examined.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers.

Market Price

The amount of money a buyer is willing to pay and a seller is willing to accept for a good or service in a competitive market.