Pegging the Yuan

Curated and Reviewed by Lesson Planet

Sal reviews the hypothetical currency balance between China and the US given an ideal market scenario, then explains the Chinese government's motivations (both optimistic options and more cynical ones) to keep the Yuan from appreciating and intentionally misbalancing trade so China has export-led growth. How can this be done? Sal introduces the Chinese Central Bank's response to a scarcity of Yuan: printing more Yuan and exchanging it for dollars to keep the Yuan devalued. This concept leads learners into a discussion about what the Chinese government does with accumulated dollars and the effect on the US economy.

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Concepts

appreciation, depreciation, the people's bank of china, currency exchange

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Additional Tags

dollar reserve, yuan, currency exchange, chinese central bank, depreciate, appreciate, social studies

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Resource Details

Grade

11th - Higher Ed

Subjects

Social Studies & History