The spot exchange rate between the dollar and the Swiss franc is a floating, or flexible, rate. What are the effects of each of the following on this exchange rate? There is a large increase in Swiss demand for U.S. exports as U.S. culture becomes more popular in Switzerland. There is a large increase in Swiss demand for investments in U.S. dollar-denominated financial assets because of a Swiss belief that the U.S. economy and political situation are improving markedly. Political uncertainties in Europe lead U.S. investors to shift their financial investments out of Switzerland, back to the United States. U.S. demand for products imported from Switzerland falls significantly as bad press reports lead Americans to question the quality of Swiss products.
The spot exchange rate between the dollar and the Swiss franc is a floating, or flexible, rate. What are the effects of each of the following on this exchange rate?
There is a large increase in Swiss
There is a large increase in Swiss demand for investments in U.S. dollar-denominated financial assets because of a Swiss belief that the U.S. economy and political situation are improving markedly.
Political uncertainties in Europe lead U.S. investors to shift their financial investments out of Switzerland, back to the United States.
U.S. demand for products imported from Switzerland falls significantly as bad press reports lead Americans to question the quality of Swiss products.
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