If China Maintains a Pegged Exchange Rate with the U

Multiple Choice

If China maintains a pegged exchange rate with the U.S. dollar, and the consequence is rising inflation, then the pegged value of the Chinese yuan must be

A) above the equilibrium $/yuan value.
B) discouraging Chinese exports in the world markets.
C) causing China to accumulate FX reserves.
D) exposing Chinese exporters and investors to the vagaries of the foreign exchange markets.