Under a floating exchange-rate system,if the U.S.dollar depreciates against the Swiss franc:
A) American exports to Switzerland will be cheaper in francs
B) American exports to Switzerland will be more expensive in francs
C) American imports from Switzerland will be cheaper in dollars
D) None of the above

Question

Quizplus · Accepted Answer

In a floating exchange-rate system, the exchange rate is determined by market forces of supply and demand. If the value of the U.S. dollar depreciates against the Swiss franc, this means it will take more dollars to buy the same amount of Swiss francs. As a result, American exports to Switzerland will be cheaper in francs, making them more competitive and potentially increasing demand for these exports.

Under a Floating Exchange-Rate System,if the U