A stronger euro is more favorable for French firms selling i

A stronger euro is more favorable for: French firms selling in Germany American tourists traveling in Germany. Italian tourists traveling abroad. Italian firms selling in Mexico.

Solution

Ans:

1) Italian tourist traveling abroad

when the euro is weak, exports are favorable and imports decreases.when the euro is strong,exports are hampered and imports become cheaper.when the euro is strong,traveling abroad becomes cheaper.Hence a strong dollar is more favorable for italian tourists traveling abroad.  

2) The U.S. dollar appreciated against canadian dollar.

In this case the exchange rate in 2002 is $1 U.S. = $1.4 canadian dollars. In 2005, $1 U.S. = $1.6 canadian dollars.Since we need to pay more canadian dollars for every U.S. dollar, we can say that U.S. dollar has be appreciated and canadian dollar has be depreciated.

3) a contractionary monetary policy

when contractionary monetary policy is adopted, interest rate is increased and money supply is decreased.