If the rate of productivity growth in Australia exceeds the rate of productivity growth in Great Britain, we would expect the Australian dollar to depreciate in value against the British pound.

Question

Quizplus · Accepted Answer

If the rate of productivity growth in Australia exceeds the rate of productivity growth in Great Britain, it is expected that the demand for Australian goods and services would increase, which would lead to an increase in the value of the Australian dollar relative to the British pound. Therefore, the Australian dollar would appreciate, not depreciate, in value against the British pound.

If the Rate of Productivity Growth in Australia Exceeds the Rate