Economics 2281 · O Level · Foreign exchange rates

Foreign exchange rates — practice question

The diagram illustrates the market for the Chinese yuan (¥), with the price expressed in US dollars ($). What might have led to the shift in demand for the yuan from $D_1$ to $D_2$?

  • Aa decrease in foreign direct investment in China
  • Ba decrease in the level of tariffs levied by China on imports
  • Can increase in the buying of yuan by central banks
  • Dan increase in the Chinese rate of interest

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