Problem: In the 1995 election for the French presidency, the Socialist candidate, Lionel Jospin, vowed to halt all privatizations, raise taxes on business, spend heavily on job creation, and cut the work week without a matching pay cut. At the time Mr. Jospin made this vow, he was running neck-and-neck with the conservative Prime Minister Jacques Chirac, who espoused free-market policies.
Q1. How do you think the French franc responded to Mr. Jospin's remarks?
Q2. In the event, Mr. Chirac won the election. What was the franc's likely reaction?
Q3. In a surprise ending to the 1997 French parliamentary elections, the Socialist party won and Mr. Jospin became Prime Minister. Given that Mr. Jospin still espoused the same policies as before, what was the likely reaction of the French franc to his election?