The figure below illustrates the market for Swiss francs in a world of market-determined exchange rates.Assume the equilibrium exchange rate is $0.5 per franc,given by the intersection of schedules S0 and D0.
Figure 11.2.Market for Francs

-Refer to Figure 11.2.A shift in the demand for francs from D0 to D2,or a shift in the supply of francs from S0 to S1,would result in a (an):

Question

The figure below illustrates the market for Swiss francs in a world of market-determined exchange rates.Assume the equilibrium exchange rate is $0.5 per franc,given by the intersection of schedules S0 and D0.
Figure 11.2.Market for Francs
 
-Refer to Figure 11.2.A shift in the demand for francs from D0 to D2,or a shift in the supply of francs from S0 to S1,would result in a (an):

Quizplus · Accepted Answer

A shift in the demand for francs from D0 to D2 would cause an increase in the price of francs, leading to an appreciation of the franc against the dollar. A shift in the supply of francs from S0 to S1 would cause a decrease in the price of francs, leading to a depreciation of the franc against the dollar. Therefore, the correct answer is B: Appreciation in the dollar against the franc.

The Figure Below Illustrates the Market for Swiss Francs in a World