Question

Suppose that the united states and china trade exclusively with each other. what will happen to the value of the u.s. dollar, ceteris paribus, if the united states established a quota on all chinese products

Answer 1

The US dollar will appreciate, or gain value compared to the Chinese yuan

Step-by-step explanation:

If the US sets an import quota on Chinese products, then the amount of imported goods would decrease. That will lead to a decrease in the amount of Chinese yuans that US companies need to purchase in order to pay for Chinese products. Since the demand for Chinese yuans decreases, the price of the yuan would also decrease compared to the US dollar.

Answer 2

The best answer to this question would be:

If the United States establishes a quota on all Chinese products “The U.S. dollar will appreciate.” The goal of this is to get people to purchase domestic goods, which can only be bought for local currency and hence increasing the value of US dollar.