Displacement occurs. Zinc is oxidized to zinc ions, and silver ions in the solution are reduced to silver which is deposited on the surface of zinc.
Zn(s) + 2AgNO3(aq) → Zn(NO3)2(aq) + 2Ag(s)
OR: Zn(s) + 2Ag^+(aq) → Zn^2+(aq) + 2Ag(s)
Observation:
Zinc dissolves. A silvery metal is deposited.