Figure 15.1 shows the market for the Swiss franc.In the figure,the initial demand for marks and supply of marks are depicted by D₀ and S₀ respectively.
Figure 15.1.The Market for the Swiss Franc
-Refer to Figure 15.1.Suppose the United States decreases investment spending in Switzerland,thus reducing the demand for francs from D₀ to D₂.Under a floating exchange rate system,the new equilibrium exchange rate would be:

Question

Figure 15.1 shows the market for the Swiss franc.In the figure,the initial demand for marks and supply of marks are depicted by D₀ and S₀ respectively.
Figure 15.1.The Market for the Swiss Franc

Figure 15.1 shows the market for the Swiss franc.In the figure,the initial demand for marks and supply of marks are depicted by D<sub>0</sub> and S<sub>0</sub> respectively. Figure 15.1.The Market for the Swiss Franc -Refer to Figure 15.1.Suppose the United States decreases investment spending in Switzerland,thus reducing the demand for francs from D<sub>0</sub> to D<sub>2</sub>.Under a floating exchange rate system,the new equilibrium exchange rate would be: A) $0.40 per franc B) $0.50 per franc C) $0.60 per franc D) $0.70 per franc

-Refer to Figure 15.1.Suppose the United States decreases investment spending in Switzerland,thus reducing the demand for francs from D₀ to D₂.Under a floating exchange rate system,the new equilibrium exchange rate would be:

Quizplus · Accepted Answer

Under a floating exchange rate system, a decrease in demand for francs would lead to a depreciation of the franc relative to the dollar, resulting in a lower exchange rate.

Figure 151 Shows the Market for the Swiss Franc