What do economists mean when they say that capital can labor can be both complementary inputs and substitutes.
What will be an ideal response?
Question 2
How were countries whose industries competed with Chinese industry affected by a yuan that was pegged to the dollar?
A) Because the yuan was undervalued at the pegged exchange rate, the level of Chinese exports remained higher than they would have been if the exchange rate was allowed to float freely.
B) Competitors feared that the declining value of the dollar would continue to make Chinese goods more expensive.
C) Because the yuan was overvalued at the pegged exchange rate, competing firms from other countries feared that abandoning the peg would lead to an increase in Chinese exports.
D) Because China's population is so large relative to other countries, the pegged exchange rate made the goods of foreign competing firms much less expensive than domestic Chinese goods.
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