Figure 30-5

-Refer to Figure 30-5. Suppose the Chinese government decides to abandon pegging the yuan to the dollar at a rate which overvalues the yuan.Using the figure above,the equilibrium exchange rate would be ________ and Chinese exports to the United States would ________ in price.

Question

Figure 30-5
 
-Refer to Figure 30-5. Suppose the Chinese government decides to abandon pegging the yuan to the dollar at a rate which overvalues the yuan.Using the figure above,the equilibrium exchange rate would be ________ and Chinese exports to the United States would ________ in price.

Quizplus · Accepted Answer

If the yuan was overvalued, abandoning the peg would lead to a depreciation to its equilibrium rate of $0.13/yuan, making Chinese exports cheaper.

Figure 30-5 -Refer to Figure 30-5. Suppose the Chinese Government Decides to Chinese