Figure 11.2.Market for Francs -Refer to Figure 11.2.A shift in the demand for francs from D₀ to D₁ or a shift in the supply of francs from S₀ to S_2, would result in a (an): A) Depreciation in the dollar against the franc B) Appreciation in the dollar against the franc C) Unchanged dollar/franc exchange rate D) None of the above

Question

Quizplus · Accepted Answer

A shift in the demand for francs from D0 to D1 indicates an increased demand for francs, leading to a depreciation of the dollar against the franc. Similarly, a shift in the supply of francs from S0 to S2 indicates a decreased supply of francs, also leading to a depreciation of the dollar against the franc.