The following question are based on the following diagram, showing the market for Swiss francs. Assume Switzerland and the United States are engaged in a system of fixed exchange rates. The official rate is $0.40 per franc.

-If,despite U.S.government intervention in the currency markets,the supply and demand curves remain as shown,the U.S government might try to
A) curtail the tourism of Swiss citizens in the United States.
B) discourage imports of Swiss goods.
C) appreciate the dollar relative to the Swiss franc by changing the official exchange rate.
D) increase its imports from Switzerland and reduce them from other countries.
E) buy gold.

Question

The following question are based on the following diagram, showing the market for Swiss francs. Assume Switzerland and the United States are engaged in a system of fixed exchange rates. The official rate is $0.40 per franc.
 
-If,despite U.S.government intervention in the currency markets,the supply and demand curves remain as shown,the U.S government might try to
A) curtail the tourism of Swiss citizens in the United States. 
B) discourage imports of Swiss goods. 
C) appreciate the dollar relative to the Swiss franc by changing the official exchange rate. 
D) increase its imports from Switzerland and reduce them from other countries. 
E) buy gold.

Quizplus · Accepted Answer

Discouraging imports of Swiss goods would reduce the demand for Swiss francs, potentially affecting the exchange rate in favor of the U.S. dollar.

The Following Question Are Based on the Following Diagram, Showing