During the Chinese experience with pegging the yuan to the U.S.dollar, the yuan was ________.As a result, there was a ________ of U.S.dollars on the market, and the Chinese government had to purchase U.S.dollars to maintain the peg.

Question

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During the period when China pegged its currency, the yuan, to the U.S. dollar, the yuan was undervalued. This undervaluation led to a surplus of U.S. dollars on the market because Chinese goods were cheaper for foreign buyers, increasing exports and the inflow of dollars. To maintain the peg, the Chinese government had to purchase these excess U.S. dollars.

During the Chinese Experience with Pegging the Yuan to the U.S.dollar