Final answer:
The dollar has decreased in value by about 13.64% against the euro when the exchange rate moved from 1.10 to 1.25 dollars/euro.
Step-by-step explanation:
If the exchange rate moves to 1.25 dollars/euro from 1.10 dollars/euro a year ago, we can calculate the percentage change of the dollar value. The formula to calculate percentage change is ((new rate - old rate) / old rate) × 100%. Plugging in the provided values, we get ((1.25 - 1.10) / 1.10) × 100%, which simplifies to (0.15 / 1.10) × 100%, or approximately 13.64%. Thus, the dollar has decreased in value by about 13.64% relative to the euro.
This could have various implications on the economy, similar to how fluctuating euro dollar exchange rates affected French firms and the U.S. exports in the examples provided. Generally, a weaker dollar can encourage U.S. exports, as American goods become cheaper for foreign buyers. Conversely, a stronger euro could discourage exports from European countries like France, as their products become more expensive for American consumers.