If China Maintains a Pegged Exchange Rate with the U

question 101

Multiple Choice

If China maintains a pegged exchange rate with the U.S. dollar, and the consequence is rising inflation, then the pegged value of the Chinese yuan must be

• A)above the equilibrium $/yuan value.
• B)discouraging Chinese exports in the world markets.
• C)causing China to accumulate FX reserves.
• D)exposing Chinese exporters and investors to the vagaries of the foreign exchange markets.

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