If the Average Rate of Productivity Growth in Indian Firms

question 144

Multiple Choice

If the average rate of productivity growth in Indian firms is greater than in Australia, then:

• A)the Indian rupee will decrease relative to the Australian dollar in the foreign exchange market.
• B)the prices of Indian products will increase.
• C)the quantity demanded of Indian products will increase relative to Australian products.
• D)All of these options are correct.

---

Definitions:

Maturity Risk

The risk of loss to an investor from changes in the price of a bond that arise from changes in the market interest rate. Also called price risk and interest rate risk. The term maturity risk emphasizes the fact that interest-induced price changes are larger with longer maturities.

Bond Prices

The market price for which a bond is bought or sold, influenced by interest rates, credit quality, and other factors.

Interest Rate Movements

Fluctuations in the interest rate over time which can affect borrowing costs and investment returns.

Stock and Bond Markets

Financial markets where shares of publicly held companies are issued and traded, and where debt securities are bought and sold.