If the inflation rate in Australia is higher than that of Italy,and productivity is growing at a slower rate in Australia than it is in Italy,in the long run:

Question

Quizplus · Accepted Answer

When a country has a higher inflation rate, its currency tends to depreciate relative to countries with lower inflation rates. Thus, the Australian dollar should depreciate relative to the euro. Additionally, slower productivity growth can lead to a weaker currency, as it reduces the international competitiveness of a country's goods and services. Therefore, the euro should appreciate relative to the Australian dollar in the long run.

If the Inflation Rate in Australia Is Higher Than That