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We are going to go ahead and take a look at the recommended file formats you should use in InDesign. If I look at my Links panel, I can see I have a variety of different file formats. I have a JPEG. I have a native Illustrator file, a native Photoshop file, along with a TIF. Now I am going to recommend, when it comes to Photoshop, that you use a PSD, and one of the advantages is when I click on the image and I go under Object Layer Options, I can see that my layers in Photoshop are supported through InDesign.
If I have my Preview icon checked, I can go ahead and I can turn off this layer and I can see what effect it would have on my image. Go ahead and turn it back on. Now, JPEG, a lot of people will tell you, is not a format you should use for commercial printing, but from an output perspective, we don't have really many problems. The JPEG files are also much smaller. The one problem you might run into is when you save a JPEG, you have different quality settings. So I would always recommend choosing the highest quality so you don't degrade from your photo.
Another format you could use is the TIF file format. It's not a bad format to use, but again, I would just stick with PSD. When it comes to Illustrator files, a lot of people would use native Illustrator files. That is a great choice. And a poor choice, in my opinion, would be using the EPS file format. Typically, you have transparency issues, and it requires a PostScript workflow, where the native Illustrator files, you don't have any of those issues. You can use the Links panel to look at the different file formats in your document, and you can avoid output issues by using the recommended file formats.
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