If the Chinese Yuan Is Pegged Below the Equilibrium Exchange

question 23

Multiple Choice

If the Chinese yuan is pegged below the equilibrium exchange rate as expressed in US dollars per yuan,

• A) the currency is undervalued.
• B) the currency is overvalued.
• C) there will be a surplus of the yuan.
• D) the Chinese central bank must sell dollars to maintain the pegged rate.

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Definitions:

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