The Chinese Government Fixes Its Exchange Rate Above Its Free-Market

question 15

Multiple Choice

The Chinese government fixes its exchange rate above its free-market equilibrium level.Its purpose in keeping the Chinese currency depreciated is probably to

• A)make it more affordable for Chinese firms to import new materials.
• B)make it more affordable for Chinese households to purchase consumer goods from the United States.
• C)maintain respect for the Chinese yuan.
• D)help maintain a current account deficit and thus a capital inflow to China.
• E)make Chinese exports more attractive to the rest of the world.

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Definitions:

Consensus

A general agreement or shared understanding among a group of people, often achieved through collective decision-making processes.

Laissez-faire Decision Making

A management style that involves a minimal amount of oversight and control, allowing individuals or groups to make decisions independently.

Reference Group

A social group that individuals use as a standard to evaluate themselves and their own behavior.

Class Reunions

Social gatherings where individuals who were part of the same academic graduating class come together to reminisce and catch up on life post-graduation.