Figure 30-5
-Refer to Figure 30-5. The Chinese government pegs the yuan to the dollar, at one of the specified exchange rates on the graph, such that it overvalues its currency. Using the figure above, this would generate

Question

Figure 30-5 
-Refer to Figure 30-5. The Chinese government pegs the yuan to the dollar, at one of the specified exchange rates on the graph, such that it overvalues its currency. Using the figure above, this would generate

Quizplus · Accepted Answer

When a currency is overvalued, it means the pegged exchange rate is higher than the market equilibrium rate, leading to a surplus of the currency. In this case, the surplus of yuan is 200 million.

Figure 30-5 -Refer to Figure 30-5. the Chinese Government Pegs the Yuan