Thailand's experience with pegging the baht to the U.S.dollar failed because the baht was ________ relative to the U.S.dollar, and China's experience with pegging the yuan to the U.S.dollar has run into difficulties because the yuan has been ________ relative to the U.S.dollar.

Question

Quizplus · Accepted Answer

Thailand's baht was overvalued relative to the U.S. dollar during its peg, leading to a currency crisis in 1997. China's yuan, on the other hand, has been undervalued relative to the U.S. dollar, causing trade tensions and difficulties. This is why option D - overvalued for the baht and undervalued for the yuan - is the best choice.

Thailand's Experience with Pegging the Baht to the U