If the Chinese Government Wants to Keep the Real and Nominal

question 58

Multiple Choice

If the Chinese government wants to keep the real and nominal exchange rates between the yuan and the U.S. dollar fixed at 8 yuan per dollar without government intervention in the foreign exchange market, the _____ rate in China must be _____ that in the United States.

• A) inflation; equal to
• B) interest; higher than
• C) inflation; constantly lower than
• D) inflation; constantly higher than

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