15. If China wanted to maintain both monetary autonomy and a fixed nominal exchange rate in regard to the United States in the long run, (a) the Chinese would want to sell their financial assets. (b) the Chinese would have to want to buy American goods. (c) the price level in China would have to move in tandem with the U.S. price level. (d) the law of one price would have to hold for at least one good. (e) Chinese interest rates would have to move in tandem with U.S. interest rates.

Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter32: A Macroeconomic Theory Of The Open Economy
Section: Chapter Questions
Problem 5QCMC
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15. If China wanted to maintain both monetary autonomy and a fixed nominal exchange
rate in regard to the United States in the long run,
(a) the Chinese would want to sell their financial assets.
(b) the Chinese would have to want to buy American goods.
(c) the price level in China would have to move in tandem with the U.S. price
level.
(d) the law of one price would have to hold for at least one good.
(e) Chinese interest rates would have to move in tandem with U.S. interest rates.
Transcribed Image Text:15. If China wanted to maintain both monetary autonomy and a fixed nominal exchange rate in regard to the United States in the long run, (a) the Chinese would want to sell their financial assets. (b) the Chinese would have to want to buy American goods. (c) the price level in China would have to move in tandem with the U.S. price level. (d) the law of one price would have to hold for at least one good. (e) Chinese interest rates would have to move in tandem with U.S. interest rates.
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