The Market for the Swiss Franc

1. Referring to the above figure, with a system of floating exchange rates, the equilibrium exchange rate is $_____ per franc.
2. Suppose that the United States increases its imports from Switzerland, resulting in a rise in the demand for francs from D₀ to D₁. Under a floating exchange rate system, the new equilibrium exchange rate would be $_____ per franc.
3. Suppose the United States decreases investment spending in Switzerland, thus reducing the demand for francs from D₀ to D₂. Under a floating exchange rate system, the new equilibrium exchange rate would be $_____ per franc.