How will the exchange rate (foreign currency per dollar)respond to an increase in the relative rate of productivity growth in Canada in the long run?

Question

Quizplus · Accepted Answer

An increase in the relative rate of productivity growth in Canada would lead to an increase in the demand for Canadian goods and services, which would subsequently increase demand for Canadian dollars. This increased demand for Canadian dollars would cause the exchange rate to rise in the long run, as foreign currency would become relatively cheaper compared to the Canadian dollar.

How Will the Exchange Rate (Foreign Currency Per Dollar)respond to an Increase