Question

g Other things the same, if the exchange rate changes from 6 Chinese yuan per dollar to 7 Chinese yuan per dollar, then the dollar a. appreciates and buys more Chinese goods. b. appreciates and buys fewer Chinese goods. c. depreciates and buys more Chinese goods. d. depreciates and buys fewer Chinese goods.

Answer 1

appreciates and buys more Chinese goods

Step-by-step explanation:

Nominal exchange rate is the rate at which one unit of currency can be exchanged for another unit of currency.

If exchange rate is 1 dollar for 6 Chinese yuan , it means that 1 dollar would buy 6 Chinese yuan.

If exchange rate now becomes 1 dollar for 7 Chinese yuan , it means that 1 dollar would buy 7 Chinese yuan.

One dollar is now buying more Chinese yaun (7>6). It means that the dollar has appreciated and the Yaun has depreciated.

Currency appreciation is when the a currency increases in value.

As a result the dollar would buy more Chinese goods.

I hope my answer helps you