An increase in Swiss interest rates will cause:
A. an increase in the demand for U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
B. a decrease in the demand for U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar.
C. an increase in the supply of U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar.
D. a decrease in the supply of U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
Answer: C
You might also like to view...
The rational expectations hypothesis is a theory that states that
A) people make their economic plans by using all available past and present information and their understanding about how the economy operates. B) individuals can predict the future perfectly, at least with respect to macroeconomic variables like the interest rate and inflation. C) people make their economic plans in an irrational, intuitive manner. D) people make their economic plans by relying on the policy statements made by the President and by leaders in Congress.
Over a particular price range, if the quantity effect of a price decrease is larger than the price effect, it implies that:
A) demand is inelastic in the price range. B) demand is elastic in the price range. C) the demand curve is vertical in the price range. D) the demand curve is upward sloping in the price range.
What happened to real interest rates during the early 1930s?
A) They declined as nominal interest rates declined. B) They rose as nominal interest rates rise. C) They declined due to deflation. D) They rose due to deflation.
In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to
A) continue its efforts to differentiate its product. B) raise its price. C) lower its price. D) do nothing, because it will inevitably experience a decline in profits.