Question

If the Chinese government sets the exchange rate at 4 yuan per 1 U.S. dollar, then the:1) supply of Chinese yuan will increase. 2) supply of Chinese yuan will decrease. 3) quantity supplied of Chinese yuan will decrease. 4) quantity supplied of Chinese yuan will increase. 5) quantity demanded of Chinese yuan will decrease.

Answer 1

If the Chinese government sets the exchange rate at 4 yuan per 1 U.S. dollar, then the supply of Chinese Yuan will increase .

Option 1

Explanation:

A regular midpoint price, based upon a previous day yuan closing rate and quotes from interbank dealers, has been developed every Morning by the People's Bank of China (PBOC).

The Yuan dropped out days after Trump suddenly stirred up a trade war with China, proposing 10 percent tariffs on some other $300 billion range of Chinese products. Yet China's People's Bank of China, Yi Guang, insists China will not "take part in international devaluation.

Investors were used to the flexibility of the yuan, after ten years of constant appreciation with the US dollar. Despite its response, China's adherence to free-market principles was challenged by many others, the new currency regime was still closely related to a 'controlled float.'

Answer 2

Answer: Quantity supplied of Chinese yuan will decrease.

Explanation: When you move up the y axis as to find the point where the US dollar reaches 1, you should follow D1 to the left. Due to it moving left, the quantity of the yuan decreases, therefore less is supplied. Hope this helps!