Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's tax level rises relative to England and nothing else changes, then the:
a. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc.
b. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc.
c. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market rises, causing an uncertain change in the value of the Swiss franc.
d. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc.
e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
.B
You might also like to view...
What is the structure of the Federal Reserve Bank System?
What will be an ideal response?
In a two-economy model of the United States and another large economy made up of the rest of the world, if desired saving by the rest of the world declined
A) U.S. investment would increase. B) U.S. saving would decrease. C) the world real interest rate would increase. D) the world real interest rate would decrease.
Vertical integration can reduce transaction costs through all of the following ways except which one?
A) decreasing the incentive for litigation B) creating managerial diseconomies C) establishing a partnership between the two firms D) increasing information and control
Spending on goods and services by all levels of government in the U.S. combined is smaller than investment spending but larger than consumption
a. True b. False Indicate whether the statement is true or false