Assume that the exchange rate is currently at $0.85 per Swiss franc and that U.S.importers start to like Swiss chocolates more than they did in the past.If the Swiss Central Bank wants to keep the Swiss franc fixed at $0.85 per Swiss franc,it will have to intervene by buying up Swiss Francs and selling dollars.

Question

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If U.S. importers start to like Swiss chocolates more, the demand for Swiss francs will increase which will lead to an appreciation of the Swiss franc. In order to keep the Swiss franc fixed at $0.85, the Swiss Central Bank would have to sell Swiss francs and buy dollars, not the other way around.

Assume That the Exchange Rate Is Currently at $0