Figure 11.2. Market for Francs

-Refer to Figure 11.2.A shift in the demand for francs from D₀ to D₂, or a shift in the supply of francs from S₀ to S₁, would result in a(n)

Question

Figure 11.2. Market for Francs -Refer to Figure 11.2.A shift in the demand for francs from D₀ to D₂, or a shift in the supply of francs from S₀ to S₁, would result in a(n)

Quizplus · Accepted Answer

A shift in the demand curve to the right (D₂) or a shift in the supply curve to the left (S₁) will result in an increase in the equilibrium quantity of francs traded and an increase in the equilibrium price of francs in terms of the dollar. As a result, the dollar will appreciate against the franc. Therefore, the correct answer is B.