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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Definitions:

Phenols

Organic compounds consisting of a hydroxyl group (-OH) attached directly to an aromatic hydrocarbon group.

Acidity

Refers to the measure of a substance's ability to donate a proton or accept an electron pair in chemical reactions.

Acid-Base Reaction

A chemical reaction involving the transfer of a proton (H⁺) from an acid to a base.

Pka Values

Numerical values that measure the acidity of protons in molecules based on their ability to be donated in an aqueous solution.