Assume instead that the spot exchange rate between the dollar and Swiss franc is a fixed or pegged rate within a narrow band around a central rate. For each change shown in Problem 9, assume that just before the change private (or nonofficial)

supply and demand intersected at an equilibrium exchange rate within this narrow band. For each change shown in Problem 9, what intervention is necessary by the monetary authorities to defend the fixed rate if the change shifts the intersection of private supply and demand outside the band?

Data From Problem 9

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9. 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? a. There is a large increase in Swiss demand for U.S. exports as U.S. culture becomes more popular in Switzerland.