1) Why do you think the Chinese government originally pegged the value of

the yuan against the U.S. dollar? What were the benefits of doing this for
China? What were the costs?
A/ The benefits of pegging their currency was that China managed its foreing
Exchange risk, making the exports cheaper, one of the cost of pegging is that
the dollars movement, up or down, affects the chinese economy.

2) Why do you think the Chinese government originally pegged the value of
the yuan against the U.S. dollar? What were the benefits of doing this for
China? What were the costs?
A/ If the yuan chinese currency appreciates in value, it would make chinese
godos more expensive in the united state, tha would reduce the compettitive
advantange that the chinese have now, and it could provably reduce the
demand.

3) How might a decision to let the yuan float freely affect future foreign
direct investment flows into China?
A/ If the Yuan appreciates against the dollar, FDI may be a more costly venture.
Even so, a company may still find it advantageous to set up an operation in
China, particularly if the company also plans to sell its product locally.

4) Under what circumstances might a decision to let the yuan float freely
destabilize the Chinese economy? What might the global implications of
this be?
A/ Chinas undervalued Yuan is fueling a boom in Chinese exports to the U.S.,
where jobs are being lost to the cheap Chinese imports. For its part, China is
facing the potential for a surge in inflation as the country expands the money
supply in an effort to maintain the artificial Yuan/dollar relationship. If the Yuan
is allowed to float, China will see some of its manufacturing slow as companies
lose the benefit of cheap Yuan exports. This could then translate into a slowing
economy. However, a stronger Yuan would give the Chinese more buying
power, which might benefit foreign producers.

5) Do you think the U.S. government should push the Chinese to let the
yuan float freely? Why?
A/ No, the U.S. government would only be harming their economy. Sure, it
would create more jobs for Americans, however, the cost of labor would be
higher and that would translate over to the final products retail prices being
higher

6) What do you think the Chinese government should dolet the yuan
float, maintain the peg, or change the peg in some way?
A/ I think it would be a good median for the Chinese government to maintain the peg. The yuan
would still maintain a similarly low value, keeping their economy thriving, and would allow for the
other world currencies to compete with the yuan. I believe that the U.S. is asking too much of the
Chinese government to let the yuan float even more than they were already pressured into doing.