1.Would each of the following groups is happy or unhappy if the euro appreciated? Explain. a) US pension fund holding French government bonds. b) German manufacturing industries. c) Australian tourists planning a trip to Europe. d) A British firm trying to purchase property in Belgium.

2. Suppose you are having breakfast with your parents one Sunday. Your father is reading the paper and comments on a report that the exchange rate for the pound has just hit its lowest value in a decade. He reads on and then exclaims that JCB, a heavy equipment manufacturer, has reported that sales of their earthmoving equipment have hit an all-time high. Your parents are shocked by the report's positive view of the low value of the pound. They've recently abandoned plans to visit Australia because of the pound's low value. a) Why might JCB and your parents have different opinions about the value of the pound? b) JCB imports many parts and raw materials for their manufacturing processes and they sell many finished products abroad. If they are happy about a low pound, what must be true about the ratio of JCB's imports and exports? c) If someone argues that a strong pound is "good for the UK" because UK residents are able to exchange some of their GDP for a greater amount of foreign GDP, is it true that a strong pound is good for every UK resident? Why?