13. China pegs it currency to the dollar. As a result: The dollar is undervalued

Question

13. China pegs it currency to the dollar. As a result:

The dollar is undervalued and this helps to lower the price of U.S. exports to China’s consumers

The dollar is overvalued and this lowers the price of China’s exports to U.S. consumers

The dollar is undervalued and this helps to increase the price of U.S. exports to China’s consumers

The dollar is overvalued and this increases the price of China’s exports to U.S. consumers

14. If a country wishes to maintain a higher value of the US dollar in relation to its domestic currency than set in the spot market, the country will:

Do nothing more than declare the desired exchange rate

Increase demand for the dollar in foreign exchange markets

Increase demand for its domestic currency in foreign exchange markets

Increase the supply the dollar in foreign exchange markets

15. The current account is equal to:

Exports minus imports

Savings minus consumption

Imports plus exports

Savings plus exports

Explanation / Answer

13) THe answer is B-) The dollar is overvalued and this lowers the price of China's ecports to U.S consumers.

because, when the china pegs its currency to the dollar, it means it fixed the exchnage rate system. so whenever the value of dollar increases, the export of the country becomes cheapier to the other country . therefore, there will be an increase in exports.

14) THe answer is B ) Increase demand for the dollar in foreign exchnage markets.

because, higher the demand for the currnecy , higher the value of the currency.

15) The answer is A -) Exports minus imports.

because current account is differnece between exports minus imports.

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