Figure 17.3 The Swiss Franc Under a System of Floating Exchange Rates

-Refer to Figure 17.3. If the U.S. imposes tariffs on imports from Switzerland, then there would be a(n)

Question

Figure 17.3 The Swiss Franc Under a System of Floating Exchange Rates
 
-Refer to Figure 17.3. If the U.S. imposes tariffs on imports from Switzerland, then there would be a(n)

Quizplus · Accepted Answer

When the U.S. imposes tariffs on imports from Switzerland, it becomes more expensive for U.S. consumers to buy Swiss goods. This leads to a decrease in the demand for Swiss francs (since fewer people need francs to buy Swiss goods), which in turn leads to an appreciation of the dollar relative to the franc.

Figure 173 the Swiss Franc Under a System of Floating Exchange