A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2010 · Q291 Mark

Assume the Chinese monetary authorities are committed to maintaining the excha China's currency the Yuan against the US$ between P₁ and P₂ on the diagram. [Figure 29.1] What might they do if demand changed from D₁ to D₂?

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

AImpose controls on Chinese investment overseas.

BIncrease interest rates.

CSell US$ out of foreign exchange reserves.

DSell Yuan on the foreign exchange markets.

✓ Correct answer

D: Sell Yuan on the foreign exchange markets.

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2010 Paper 1 Variant 2, question 29.

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