Other things equal, under a floating exchange rate system, if the U.S.dollar depreciates against the Swiss franc
A) American exports to Switzerland will be cheaper in francs.
B) American exports to Switzerland will be more expensive in francs.
C) American imports from Switzerland will be cheaper in dollars.
D) None of these are correct.

Question

Quizplus · Accepted Answer

A depreciated U.S. dollar means that American goods will be cheaper for foreigners to purchase, including Swiss imports. This makes American exports cheaper for Swiss consumers to buy, leading to an increase in demand for American products and an increase in American export sales to Switzerland.

Other Things Equal, Under a Floating Exchange Rate System, If