Figure 151 Shows the Market for the Swiss Franc

question 83

Multiple Choice

Figure 15.1 shows the market for the Swiss franc.In the figure,the initial demand for marks and supply of marks are depicted by D₀ and S₀ respectively.
Figure 15.1.The Market for the Swiss Franc
-Refer to Figure 15.1.Suppose the demand for francs increases from D₀ to D₁.Under a fixed exchange rate system,the U.S.exchange stabilization fund could maintain a fixed exchange rate of $0.50 per franc by:

• A) Selling francs for dollars on the foreign exchange market
• B) Selling dollars for francs on the foreign exchange market
• C) Decreasing U.S.exports,thus decreasing the supply of francs
• D) Stimulating U.S.imports,thus increasing the demand for francs

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Definitions:

T-Accounts

A tool used in accounting to represent a general ledger account, summarizing debit and credit transactions.

Cost Of Goods Manufactured

The total cost incurred by a company to produce goods in a certain period, including costs associated with materials, labor, and overhead.

T-Accounts

A graphical representation of a ledger account, used in accounting to show the effects of transactions on individual accounts.

Work In Process

Partially finished goods that are still in the production process, representing a component of inventory costs on the balance sheet.