Most economists have argued that in the 2000s,the Chinese yuan was ________ relative to the US dollar,causing the Chinese central bank to ________ US dollars to maintain the peg.
A) overvalued; sell
B) overvalued; buy
C) undervalued; sell
D) undervalued; buy

Question

Quizplus · Accepted Answer

Most economists have argued that in the 2000s, the Chinese yuan was undervalued relative to the US dollar, causing the Chinese central bank to buy US dollars to maintain the peg. This is because an undervalued currency makes a country's goods cheaper on the international market, increasing exports and boosting the country's economy. By buying US dollars, the Chinese central bank was able to keep the value of the yuan low, making Chinese exports more competitive.

Most Economists Have Argued That in the 2000s,the Chinese Yuan