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Answer: Only I. and II. benefit from yuan depreciation
An appreciation of the USD against the CNY is the same as a **depreciation of the yuan**. - **I. Chinese exporters to the US** benefit because their goods become cheaper in dollar terms, supporting sales. - **II. American tourists to China** benefit because their dollars buy more yuan, making travel in China cheaper. - **III. A US bank with yuan-denominated loans** is hurt because the USD value of the yuan assets falls. - **IV. A US manufacturer exporting to China** is hurt because its goods become more expensive for Chinese buyers. Therefore, **only I and II benefit directly**, so **option B** is correct.
Author: Manit Arora
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500.2. Recently, China's central bank devalued the yuan against the US dollar. Consider the impact of a yuan devaluation on the following four groups:
I. Chinese exporters to the US
II. American tourists to China
III. A US bank that has invested abroad in China--but without hedging--by making yuan-denominated loans
IV. A US manufacturer that exports to China
Which of the group(s) benefits directly from an appreciation of the USD against the CNY?
A
None benefit from yuan depreciation
B
Only I. and II. benefit from yuan depreciation
C
Only III. and IV. benefit from yuan depreciation
D
All benefit from yuan depreciation
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