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

Question

Quizplus · Accepted Answer

If the rate of productivity growth in Canada exceeds the rate of productivity growth in Great Britain, it is likely that the Canadian economy will become more competitive compared to the British economy. This could lead to an increase in demand for Canadian goods and services, and therefore an increase in demand for the Canadian dollar. As a result, we would expect the Canadian dollar to appreciate in value against the British pound, not depreciate.

If the Rate of Productivity Growth in Canada Exceeds the Rate