Assume the Chinese monetary authorities are determined to keep the exchange rate of China’s currency, the Yuan, against the US$ within the range shown by P1 and P2 on the diagram. What could they do if demand shifted from D1 to D2?
- AImpose controls on Chinese investment overseas.
- BIncrease interest rates.
- CSell US$ out of foreign exchange reserves.
- DSell Yuan on the foreign exchange markets.