1. Why are southern European countries particularly vulnerable to a strong euro?

2. How does the relatively high inflation rate in southern Europe add to the problems created by a strong euro?

3. In contrast to southern Europe, northern Europe, especially Germany, exports more complex and brand-name manufactured items, such as automobiles, machine tools, and specialty chemicals. Would you expect German exports to be more or less sensitive than southern European exports to pricing pressures from a strong euro? Explain.