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Exchange rate between the united states and china

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Reference no: EM131157911

Suppose the exchange rate between the United States and China changed from 1USD=6.6CNY to 1USD=6CNY. In addition, there is sudden inflation in the United States but, but not in China.

  1. *What do you expect to happen to US exports and Chinese imports based on the change in exchange rate (all else equal)?
  2. *What do you expect to happen to US exports and Chinese imports based on the difference in inflation (all else equal)?
  3. *You are a US producer of the IPhone and are exporting them to China.  Please explain what you prefer to happen to the US/CNY exchange rate as well as relative inflation between the US and China?

Reference no: EM131157911

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