the United States is running a deficit trade balance with China, then in a free market we would expect the value of the Chinese yuan to depreciate against the U.S.dollar.

Question

Quizplus · Accepted Answer

In a free market, a trade deficit would typically lead to the depreciation of the currency of the country with the deficit (U.S. dollar) as demand for the foreign currency (Chinese yuan) increases to pay for imports.

The United States Is Running a Deficit Trade Balance with China