If the rate of growth in labor productivity in the United States increases relative to the rate of growth in labor productivity in other countries, then
A) the dollar's exchange value depreciates against other currencies.
B) the dollar's exchange value remains constant against other currencies.
C) Americans are willing to pay more U.S. dollars per unit of foreign currency.
D) Americans are willing to pay fewer U.S. dollars per unit of foreign currency.

Question

Quizplus · Accepted Answer

When the rate of growth in labor productivity in the United States increases relative to other countries, it means that the U.S. is becoming more efficient in producing goods and services. This increased efficiency makes U.S. goods more competitive internationally, leading to an increase in demand for the dollar to purchase these goods. As demand for the dollar increases, its value appreciates, meaning Americans will need to pay fewer U.S. dollars per unit of foreign currency.

If the Rate of Growth in Labor Productivity in the United