Assume that the Chinese government allowed the yuan to float relative to the U.S. dollar. Appreciation in the yuan could have an adverse affect on sales of Chinese goods to the U.S. This possible impact on Chinese exports is referred to as:

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Economic exposure refers to the impact of exchange rates on a company's future cash flows, which can be affected by changes in exchange rates. If the yuan appreciates relative to the U.S. dollar, Chinese goods will become more expensive for U.S. consumers, leading to lower demand and potentially lower sales for Chinese exporters. Translation exposure refers to the impact of exchange rate changes on a company's financial statements, transaction exposure refers to the risk of losses from unexpected currency fluctuations in the short term, and accounting exposure refers to the need to adjust financial statements to conform to different accounting standards in different countries.

Assume That the Chinese Government Allowed the Yuan to Float