Figure 11.1 illustrates the supply and demand schedules for the Swiss franc.Assume that exchange rates are flexible.
Figure 11.1.Supply and Demand Schedules of Francs

-Refer to Figure 11.1.Suppose the exchange rate is $.30 per franc.At this exchange rate there is an ____ of francs which leads to a ____ in the dollar price of the franc,a (an) ____ in the quantity of francs supplied,and a (an) ____ in the quantity of francs demanded.
A) Excess demand,rise,increase,decrease
B) Excess demand,rise,decrease,increase
C) Excess supply,fall,decrease,increase
D) Excess supply,fall,increase,decrease

Question

Figure 11.1 illustrates the supply and demand schedules for the Swiss franc.Assume that exchange rates are flexible.
Figure 11.1.Supply and Demand Schedules of Francs
 
-Refer to Figure 11.1.Suppose the exchange rate is $.30 per franc.At this exchange rate there is an ____ of francs which leads to a ____ in the dollar price of the franc,a (an) ____ in the quantity of francs supplied,and a (an) ____ in the quantity of francs demanded.
A) Excess demand,rise,increase,decrease 
B) Excess demand,rise,decrease,increase 
C) Excess supply,fall,decrease,increase 
D) Excess supply,fall,increase,decrease

Quizplus · Accepted Answer

At an exchange rate of $.30 per franc, there is excess demand for francs, as the quantity demanded exceeds the quantity supplied. This leads to a rise in the dollar price of the franc, an increase in the quantity of francs supplied (as suppliers respond to the higher price), and a decrease in the quantity of francs demanded (as buyers are deterred by the higher price).

Figure 111 Illustrates the Supply and Demand Schedules for the Swiss