How Were Countries Whose Industries Competed with Chinese Industry Affected

question 131

Multiple Choice

How were countries whose industries competed with Chinese industry affected by a yuan that was pegged to the dollar?

• A)Because the yuan was undervalued at the pegged exchange rate,the level of Chinese exports remained higher than they would have been if the exchange rate was allowed to float freely.
• B)Because the yuan was overvalued at the pegged exchange rate,competing firms from other countries feared that abandoning the peg would lead to an increase in Chinese exports.
• C)Competitors feared that the declining value of the dollar would continue to make Chinese goods more expensive.
• D)Because China's population is so large relative to other countries,the pegged exchange rate made the goods of foreign competing firms much less expensive than domestic Chinese goods.