Consequences of supporting an overvalued yuan-per-dollar exchange rate are ________,and diplomatic issues between China and its trading partners.

Question

Quizplus · Accepted Answer

When China supports an overvalued yuan-per-dollar exchange rate, it leads to a large trade deficit of the United States with China as China's exports become more expensive, and the US imports become relatively cheaper. This can lead to diplomatic issues between the two nations. Additionally, a higher exchange rate leads to lower buying power for Chinese workers as their products become more expensive for foreign buyers.

Consequences of Supporting an Overvalued Yuan-Per-Dollar Exchange Rate Are ________,And