Micromania has recently experienced a slowdown in its labor productivity growth relative to its international trading partners. Micromania can expect, if this trend continues, the currency of its trading partners to be devalued.

Question

Quizplus · Accepted Answer

If Micromania's labor productivity growth slows relative to its trading partners, it is more likely that Micromania's currency would weaken or depreciate against its trading partners' currencies, not the other way around. Higher productivity in other countries makes their goods more competitive, potentially leading to a stronger currency value for those countries.

Micromania Has Recently Experienced a Slowdown in Its Labor Productivity