If the Swiss demand for dollars is inelastic, then an appreciation of the dollar against the franc will lead to a greater quantity of francs being supplied to the foreign exchange market to obtain dollars.

Question

Quizplus · Accepted Answer

If the Swiss demand for dollars is inelastic, an appreciation of the dollar would not significantly increase the quantity of francs supplied to the foreign exchange market because the quantity demanded of dollars would not change much with the change in exchange rate.

If the Swiss Demand for Dollars Is Inelastic, Then an Appreciation