Asked by Isaiah Drayton on May 06, 2024
Verified
If a dollar is initially valued at 10 Swiss francs and its value changes to 12 Swiss francs,then the value of a Swiss franc (in terms of dollars) has
A) increased only if the demand for Swiss francs has increased.
B) remained the same.
C) increased.
D) decreased.
E) changed in a manner that cannot be determined without additional information concerning the demand for and supply of Swiss francs.
Swiss Francs
The currency of Switzerland and Liechtenstein, known by the ISO code CHF, and recognized for its stability and reliability.
Demand for Swiss Francs
The desire or need by individuals or institutions to acquire Swiss Francs, often influenced by factors such as investment opportunities and economic stability.
- Understand the processes and consequences of floating and fixed exchange rates.
- Comprehend the significance of supply and demand in establishing the value of freely floating exchange rates.
Verified Answer
MP
michelle plattMay 10, 2024
Final Answer :
D
Explanation :
The value of the Swiss franc in terms of dollars has decreased because it now takes more Swiss francs to equal one dollar. This indicates a relative decrease in the value of the Swiss franc against the dollar, independent of the reasons behind the change in exchange rate.
Learning Objectives
- Understand the processes and consequences of floating and fixed exchange rates.
- Comprehend the significance of supply and demand in establishing the value of freely floating exchange rates.