Appreciation of the Swiss franc will:
A)intensify an existing disequilibrium in France's balance of payments.
B)make France's exports less expensive and its imports more expensive.
C)make France's exports more expensive and its imports less expensive.
D)make France's exports and imports both more expensive.

Question

Quizplus · Accepted Answer

Appreciation of the Swiss franc means that the value of the Swiss franc has increased relative to other currencies, including the Euro, which is used in France. This makes goods and services from Switzerland more expensive for French consumers, thus decreasing the demand for Swiss exports. This, in turn, makes Swiss producers less competitive in global markets. On the other hand, French goods and services become less expensive for Swiss consumers, increasing the demand for French products. This makes French exports more competitive in global markets. Therefore, appreciation of the Swiss franc makes France's exports more expensive and its imports less expensive.

Appreciation of the Swiss Franc Will