Assume That Switzerland and Britain Have Floating Exchange Rates

question 214

Multiple Choice

Assume that Switzerland and Britain have floating exchange rates. Other things unchanged, if a tight money policy raises interest rates in Britain as compared to Switzerland,

• A)gold bullion will flow into Switzerland.
• B)the Swiss franc will depreciate.
• C)the pound will depreciate.
• D)the Swiss franc will appreciate.

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Definitions:

Securities Act

The Securities Act, often referred to specifically as the Securities Act of 1933, is a U.S. law that regulates the sale of securities, primarily requiring issuers to disclose significant financial information to investors.

Household Products Corporation

A business organization that manufactures and sells goods utilized for domestic purposes, such as cleaning supplies, detergents, and personal care items.

Prospectus

A written document required by securities laws when a security is being sold. The prospectus describes the security, the financial operations of the issuing corporation, and the risk attaching to the security.

Prospectus

A formal document that companies must publish before issuing public stock, detailing the investment offering and associated risks.