In 2010, arguing that the Chinese yuan was overvalued versus the U.S. dollar, President Barack Obama said he wanted “to make sure our goods are not artificially inflated in price and their goods are not artificially deflated in price; that puts us at a huge competitive disadvantage.”

a. What does the value of the yuan have to do with U.S. goods being “artificially inflated in price” or Chinese goods being “artificially deflated in price”?

b. Why would this “inflation” and “deflation”

in prices put U.S. goods at a competitive disadvantage?