Identify whether excess demand or excess supply will occur when Country C’s central bank would not purchase Country U’s dollar in the foreign exchange markets, exchange rate remain at 6.40 yuan per Country U’s dollar, and the yuan or Country U’s dollar appreciates.

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Chapter 26, Problem 14APA

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Identify whether excess demand or excess supply will occur when Country C’s central bank would not purchase Country U’s dollar in the foreign exchange markets, exchange rate remain at 6.40 yuan per Country U’s dollar, and the yuan or Country U’s dollar appreciates.

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