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How will a stronger euro affect the following economic agents? A France importer to Japan A...

How will a stronger euro affect the following economic agents?

  1. A France importer to Japan

  2. A German tourist visiting China

  3. A Greek bank investing in a Canadian government bond

  4. A French exporter to Germany

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Answer #1

a) A strong euro will badly affect the France importer to Japan because people in Japan find European goods more expensive. With a strong Euro currency, they will purchase less of european goods and so there will be less imports.

b) German tourist visiting China will be in a better off position. This is because as Euro strengthens, Germans would find Chinese products relatively cheaper. They can buy more chinese goods with one euro. Hence, strong euro will help the german tourist visiting China.

c) Greek bank investing in Canadian government bonds will be in a better off position if there is a strong Euro. A strong euro will make the Canadian government bonds relatively cheaper as they can buy more bonds with one Euro.

d) No effect. Since the currency used in both France and Germany is Euro, there wont be any effect if the currency becomes strong. There wont be any change in the trade.

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