a[2] : the value of yuan against the US dollar depreciate(1) fluctuate from 6.

02 per US dollar in 2014

to around 6.85 per US dollar in 2017.(1)
b[4] :
-- a tariff is a tax on imports. tariff increase the cosy of foreign goods in the domestic market and
lowering the quantity of products imported.

--import quote sets a quantitative limit on the sale of a foreign good in a country. the quota limits the
quantity imported and thus raises the market price of foreign goods.

c[4]:
:)
1. if there is a decline in the demand for exports, resources could be diverted to produce goods for
domestic consumption, therefore increase the quality and quantity of domestic production, increase
the standard of living for domestic consumers.
2. as there is less demand for export, the amount of net export which is a component of aggregate
demand decreases, therefore shift the aggregate demand to the left, resulting in a lower price level,
therefore reduce inflationary pressure.
3. if the fall in the surplus is due to an increase in imports, it may represents that china is wealthier,
therefore it can afford more imports, which leads to higher standard of living for Chinese population
:(
1. as there is lower demand for exports, the net exports -- which is a component of GDP-- will
decrease. therefore shifts the aggregate demand to the left, results in a decrease in GDP and
economic growth
2. a lower demand for exports may leads to the reduction in size or bankrupcy of business due to
reducing demand for their output, therefore results in an increase in unemployment.
d[4]: first of all, as it is managed float exchange rate, it allow currency to fluctuates aginst other
currencies according to market force in a certain range, therefore save some of the expense to
control the exchange rate compared to fix exchange rate.
besides, the fact that it is managed in a certain range, it ensures the stability for international
trade between countries. it reduces uncertainties for international trade. allows firms, both foreign
and domestic to be certain about future costs and prices, thereby encouraging international trade and
exchange.
1. the government will still have some influence.
2. the central bank will be able to influence exchange rate by intervention, e.g. buying /selling
currencies or by changes in interest rate
3. extent of float will be within certain limits.
4. the government will be able to influence an economy through demand management
5. a managed float will allow an economy to have the best of both worlds ( floating/fixed)

a free floating exchange rate system will be self-adjusting, but freely floating exchange rates tend to
be rather volatile and unstable.

a pegged exchange rate system will provide stability and therefore confidence, but the maintenance
of this exchange tate could require extensive support through the use of reserves.

some reserves will be needed ( US$ 2 trillion in the case of china ), but given that there is limited
floating, not as much reserve as in the case of a fixed exchange rate system; there is greater stability
than in a freely floating system, but not as much as in a pegged exchange rate system.
e{6]:
winners:
1. the local producers of china and America can benefit, as their competitors from foreign may face
higher cost from tariff or simply being restricted because of quota, their competitor’s competitiveness
will decrease in domestic market. therefore, the local producers can enjoy larger market shares and
gain more profits without foreign competition.
2. competitive country will also be the winner from the trade war, for example, now US donn’t want
to import goods from china, it may import the thing it needs from a competitor to country, for
example, india. the competitor country now can gain the market share in us market which previously
belongs to china, therefore increase its amount of export and therefore results in a gain in GDP.
3. local consumer if the resources used to produce export now is diverted to production of domestic
products.
1. infant/sunrise industry
2. declining/sunset industry
3. strategic industry
4. anti-dumping
5. revenue-raising through tariffs
6. removal of BOP deficit
losers:
1. the local producer who used to earns a living by export
2. local consumers, they used to enjoy a wider varieties of goods and services produced by US. with
the beginning of trade war, as a results of tariff imposed on imports, the price of imports get higher,
resulting in a reduced consumer surplus gain from the imports.
3. the country itself
1. lower level of output
2. countries can not consume outside of their PPCs anymore
3. less efficiency of production
CONCLUSION/EVALUATIVE JUDGEMENT