During the Chinese experience with pegging the yuan to the dollar, the yuan was undervalued. As a result,
A) the prices of Chinese exports were higher than they would have been without the peg.
B) the equilibrium value of the yuan was below the pegged value of the yuan.
C) there was a surplus of yuan on the market that the Chinese government had to purchase to maintain the peg, depleting China's reserves of dollars.
D) there was a surplus of dollars on the market that the Chinese government had to purchase to maintain the peg.
D
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Under some circumstances, trade could stifle the development of new industries and reduce global efficiency. All of the following describe conditions that could lead to that situation EXCEPT
A) an initial head start gives a scale advantage to already existing firms in one country. B) diseconomies of scale make it impossible for new firms to enter the market. C) a location has a better-developed linkage between suppliers and producers, giving it a cost advantage. D) a historical accident, such as the shifting of airplane production to the United States to avoid World War II bombings, causes firms in one location to have a competitive advantage.
Higher input prices result in
A) upward shifts of MC and reductions in output. B) upward shifts of MC and increases in output. C) downward shifts of MC and reductions in output. D) downward shifts of MC and increases in output. E) increased demand for the good the input is used for.