All of the Following Statements Are Correct EXCEPT

question 80

Multiple Choice

All of the following statements are correct EXCEPT

• A) China's exchange rate policy boosts exports in the long run.
• B) China's exchange rate policy is mainly an attempt to control inflation.
• C) China's exchange rate policy results in a depreciated yuan.
• D) China's exchange rate policy does not impact the real exchange rate in the long run.

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Definitions:

Homothetic Preferences

A consumer preference structure in which utility functions display constant returns to scale, meaning relative consumption patterns do not change as income levels change.

Substitution Effect

The change in consumption patterns due to a change in relative prices of goods, leading individuals to substitute cheaper goods for more expensive ones.

Compensated Demand Function

A demand function that adjusts for changes in income to show how quantities demanded by consumers change in response to a price change while keeping utility constant.

Adequately Paid

Compensation that meets or exceeds the value of the work performed or the qualifications of the individual.