The Chinese government fixes its exchange rate well above its free- market equilibrium level. Its purpose in keeping the Chinese currency depreciated is probably to
A) make it more affordable for Chinese households to purchase consumer goods from the United States.
B) make Chinese exports more attractive to the rest of the world.
C) make it more affordable for Chinese firms to import new materials.
D) help maintain a current account deficit and thus a capital inflow to China.
E) maintain respect for the Chinese yuan.
Correct Answer:
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