Suppose the Chinese government wants to set a fixed exchange rate equal to $6.00 per yuan, and the current equilibrium exchange rate is $4.00 per yuan. To keep the exchange rate fixed at $6.00 per yuan, the Chinese government could   limit the ability of foreigners to purchase yuan. allow the exchange rate to be completely determined by the market. purchase yuan from the foreign exchange market.

Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter34: International Finance
Section34.3: Fixed Exchange Rates
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Suppose the Chinese government wants to set a fixed exchange rate equal to $6.00 per yuan, and the current equilibrium exchange rate is $4.00 per yuan.

To keep the exchange rate fixed at $6.00 per yuan, the Chinese government could

 

limit the ability of foreigners to purchase yuan.

allow the exchange rate to be completely determined by the market.

purchase yuan from the foreign exchange market.

lower interest rates.

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