If the French demand for American exports rises at the same time that U.S.productivity rises relative to French productivity,then,in the long run,

Question

Quizplus · Accepted Answer

An increase in demand for American exports from France will lead to an increase in demand for dollars by the French, which correlates with a dollar appreciation. Additionally, an increase in US productivity implies the US economy is more efficient and profitable, which in turn increases the dollar's value relative to the euro. Therefore, the dollar should appreciate relative to the euro.

If the French Demand for American Exports Rises at the Same