Question
If the demand and supply curve of Quantity of Chinese Yuan (x-axis) vs. $/Yuan (y-axis) interesect at 0.5 (i.e. 2 yuans to a Dollar) and
If the demand and supply curve of Quantity of Chinese Yuan (x-axis) vs. $/Yuan (y-axis) interesect at 0.5 (i.e. 2 yuans to a Dollar) and now Chinese government decides to set the exchange rate at 4 yuans per 1 US dollar, then the
a. Supply of Yuan will increase
b. Supply of yuan will decrease
c. Quantity supplied of Chinese yuan will decrease
d. Quantity supplied of Chinese yuan will increase
e. Quantity demanded of Chinese yuan will decrease
Coursehero expert answer says a. Supply of yuan will increase. But it seems to me if the exchange rate is changed from 0.5 to 0.25 Dollars to Yuan, then it is just a downward movement on Supply curve and it just changes the quantity supplied of yuan to a lower amount, i.e. Quantity supplied of yuan will decrease, and answer should be C. Quantity supplied of Chinese yuan will decrease. Is that not correct?
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