China began pegging its currency, the yuan, to the U.S.dollar in 1994.Because the yuan was ________ at the pegged exchange rate, the Chinese government increased its reserves of ________ as the government purchased more ________ to maintain the pegged exchange rate.

Question

Quizplus · Accepted Answer

The yuan was undervalued at the pegged exchange rate, which means that it was worth less than its true value compared to the U.S. dollar. To maintain this exchange rate, the Chinese government purchased more U.S. dollars, leading to an increase in its reserves of U.S. dollars.

China Began Pegging Its Currency, the Yuan, to the U