1.1. Draw a diagram, similar to Figure 34-10, representing the foreign exchange situation of China when it...

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1.1. Draw a diagram, similar to Figure 34-10, representing the foreign exchange situation of China when it kept the exchange rate fixed. (Hint: Express the exchange rate as U.S. dollars per yuan.) Then show with a diagram how each of the following policy changes might eliminate the disequilibrium in the market.

a. An appreciation of the yuan

b. Placing restrictions on foreigners who want to invest in China

c. Removing restrictions on Chinese who want to invest abroad

d. Imposing taxes on Chinese exports, such as shipments of clothing, that are causing a political backlash in the importing countries

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Economics

ISBN: 978-0716771586

2nd Edition

Authors: Paul Krugman ,Robin Wells

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