7. Suppose that the government of China is currently fixing the exchange rate between the U.S. dollar

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7. Suppose that the government of China is currently fixing the exchange rate between the U.S. dollar and the Chinese yuan at a rate of $1 = 6 yuan. Also suppose that at this exchange rate, the people who want to convert dollars to yuan are asking to convert $10 billion per day of dollars into yuan, while the people who are wanting to convert yuan into dollars are asking to convert 36 billion yuan into dollars. What will happen to the size of China’s official reserves of dollars? LO21.4

a. Increase.

b. Decrease.

c. Stay the same.

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Macroeconomics

ISBN: 9781259915673

21st Edition

Authors: Campbell McConnell, Stanley Brue , Sean Flynn

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