Question

1 poin QUESTION 10 Between 1994 and 2005, China pegged the value of the yuan to the dollar at a fixed exchange rate of 8.28 yuan to the dollar (R yis). Over the same period, the United States had a growing bilateral trade deficit with China. What impact did the U.S. trade deficit have on the ability of China to maintain a fixed exchange rate? - The U.S. trade deficit did not have an impact because China's exchange rate policy is not determined by negotiations with the United States. dollar exchange rate (Ry/s) and required government intervention. dollar exchange rate (Ryrs) and required government intervention. The U.S. trade deficit decreased the demand for dollars in China, which put upward pressure on the yuan to the The U.S. trade deficit decreased the supply of dollars in China, which put downward pressure on the yuan to the The U.S. trade deficit increased the supply of dollars in China, which put downward pressure on the yuan to the dollar exchange rate (Ry/s) and required government intervention.

Answer 1

10.

B

Increased level of US trade deficit, depreciated the value of US dollar and demand of US dollars decreased. It caused, Chinese Yuan to appreciate . As a result, it became mandatory for the Chinese government to intervene and make it at a fixed rate.

11.

A.

After 2005 onward, China let the currency to appreciate and get its fair value against the basket of currencies.