Figure 19-5
-Refer to Figure 19-5.Suppose the pegged exchange rate is $0.14/yuan and U.S.consumers increase their demand for Chinese products.Using the figure above,this would

Question

Figure 19-5 
-Refer to Figure 19-5.Suppose the pegged exchange rate is $0.14/yuan and U.S.consumers increase their demand for Chinese products.Using the figure above,this would

Quizplus · Accepted Answer

When U.S. consumers increase their demand for Chinese products, they need more yuan to purchase these goods. This increases the demand for yuan, shifting the demand curve to the right. At the pegged exchange rate, this results in a decrease in the surplus of Chinese yuan because more yuan are being demanded by U.S. consumers, reducing the excess supply of yuan at the pegged rate.

Figure 19-5 -Refer to Figure 19-5.Suppose the Pegged Exchange Rate Is $0.14/yuan