Refer to Figure 19-5. Suppose the Chinese government decides to abandon pegging the yuan to the dollar at a rate which undervalues the yuan

Using the figure above, the equilibrium exchange rate would be ________ and Chinese exports to the United States would ________ in price.
A) $0.11/yuan; increase
B) $0.11/yuan; decrease
C) $0.14/yuan; increase
D) $0.13/yuan; increase
E) $0.13/yuan; decrease

D

Economics

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