US are experiencing a productivity growth.When comparing to other countries with lower productivity growth,we expect to see
A)Its exchange rate appreciating
B)Its exchange rate depreciating
C)It has no effect on the US exchange rate
D)None of the above

Question

Quizplus · Accepted Answer

An increase in productivity growth suggests a higher demand for US goods and services. This leads to an increase in demand for the US dollar, which drives up its exchange rate. As a result, the US dollar becomes more expensive relative to other currencies. This is a classic case of supply and demand, as the supply of US dollars remains constant while its demand increases, thereby driving up its price. Therefore, Option A is the best answer.

US Are Experiencing a Productivity Growth