If China Wanted to Maintain a Fixed Nominal Exchange Rate

question 78

Multiple Choice

If China wanted to maintain a fixed nominal exchange rate to the United States in the long run,

• A)the price level in China would have to move in tandem with the U.S.price level.
• B)Chinese interest rates would have to move in tandem with U.S.interest rates.
• C)the law of one price would have to hold for at least one good.
• D)the Chinese would have to want to buy American goods.
• E)the Chinese would want to sell its financial assets.

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