Question: QUESTION 3 What will happen when there is a decrease in the relative rateof productivity growth in Australia compared to other countries inthe long run?

QUESTION 3

  1. What will happen when there is a decrease in the relative rateof productivity growth in Australia compared to other countries inthe long run?

    Production costs will fall relative to other countries and theAUD will appreciate against other currencies.

    Production costs will rise relative to other countries and theAUD will depreciate against other currencies.

    Production costs will rise relative to other countries and theAUD will appreciate against other currencies.

    Production costs will fall relative to other countries and theAUD will depreciate against other currencies.

    Exchange rates of AUD will be unaffected by changes in therelative rate of productivity growth in Australia.

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