Swatch group and francogedden

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Reference no: EM132937103

Read the case, "Swatch Group and Francogedden".

To better understand price control policies like price floors and price ceilings, watch this video 

For this exercise, it may help you to reframe this market as the market for Swiss Francs, where price (y-axis) is the exchange rate between francs and euros and quantity of SFr is on the x-axis.

Original Post Instructions:

  • Based on the case, course materials, and your understanding of price ceilings and floors, answer the following questions:
  • Why did the Swiss National Bank (SNB) implement a price ceiling in 2011?
  • How did SNB maintain this price ceiling?
  • Explain the effect of such a ceiling on the monetary base of Switzerland? Hint: think through how exchange rate affects a country's current account and financial account balance.

Reference no: EM132937103

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