The Following Figure Depicts the Demand for Chinese Yuan in the Foreign

question 86

Multiple Choice

The following figure depicts the demand for Chinese yuan in the foreign currency exchange market. Use this figure to answer the next questions:
-If the interest rates in China fall relative to interest rates in the United States and, at the same time, U.S. consumer demand for Chinese goods decreases, the demand curve in the figure above:

• A) will not shift because interests rates are not related to exchange rates.
• B) will not shift because interests rates only affect the supply curve.
• C) can either increase from D₁ to D₂ or decrease from D₁ to D_3.
• D) will increase from D₁ to D_2.
• E) will decrease from D₁ to D_3.

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Definitions:

Promissory Estoppel

A legal principle that prevents a person from going back on a promise, even if it was not a formal contract, when the other party has relied on that promise to their detriment.

Legal Detriment

A loss or disadvantage that occurs to one party in a contract, considered a necessary component for a valid contractual agreement.

UCC

Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Seal

A device used to impress or mark documents as a form of authentication or to signify agreement.