An Increase in Swiss Interest Rates Will Cause

question 45

Multiple Choice

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.

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Definitions:

Idle Capacity

Refers to the unused production capacity of a company, where equipment and resources are not being used to their full potential due to insufficient demand or operational inefficiencies.

Fixed Costs

Costs that remain constant in total amount regardless of fluctuations in activity level within a relevant period.

Outside Supplier

An external entity that provides goods or services to a company, usually part of the supply chain.

Transfer Price

The cost applied to products or services exchanged between units or affiliates within the same corporation.