Assume that some U.S. firms will purchase supplies from either China or from U.S. firms. If the Chinese yuan appreciates against the dollar, it should reduce the U.S. balance of trade deficit with China.

Question

Quizplus · Accepted Answer

If the yuan appreciates, it will make Chinese goods more expensive for U.S. firms, which will cause them to purchase fewer goods from China and more from U.S. firms. This will reduce the U.S. trade deficit with China.

Assume That Some U