The Article on China's $3 Trillion of Reserves Indicates That

question 61

Multiple Choice

The article on China's $3 trillion of reserves indicates that the yuan's depreciation is due to

• A)Intervention of the Chinese government into the exchange markets to purchase yuan.
• B)Intervention of the Chinese government to purchase dollars to suppress the yuan.
• C)Intervention of the U.S.government to cause the dollar to depreciate.
• D)Intervention on the part of the U.S.government to devalue the yuan.

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Definitions:

Demand-Side Market Failure

Demand-side market failure occurs when demand curves do not reflect consumers' full willingness to pay for a good or service, often due to externalities or public goods.

Government Failure

Occurs when government intervention in the economy creates inefficiency, leading to an allocation of resources that worsens rather than improves outcomes.

Consumer Surplus

The difference between the maximum amount consumers are willing to pay for a good or service and the actual price they pay, measuring the benefit consumers receive from purchasing at a lower price.

Producer Surplus

The difference between the amount that producers are willing and able to supply a good for and the amount they actually receive due to market conditions.