How Will the Exchange Rate (Foreign Currency Per Dollar)respond to a Decrease

question 23

Multiple Choice

How will the exchange rate (foreign currency per dollar) respond to a decrease in the relative rate of productivity growth in Australia in the long run?

• A)Exchange rates will rise.
• B)Exchange rates will fall.
• C)Exchange rates will be unaffected by changes in the relative rate of productivity growth in Australia, both in the short run and in the long run.
• D)The exchange rate will be affected in the short run, but not in the long run.

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Definitions:

Enterokinase

Intestinal proteolytic enzyme that converts trypsinogen into trypsin.

Trypsinogen

An inactive enzyme precursor produced in the pancreas, that, once activated to trypsin, plays a key role in the digestion of proteins in the small intestine.

Cholecystokinin

Cholecystokinin is a hormone produced by the cells of the duodenum, involved in stimulating the digestion of fat and protein by triggering the gallbladder to release bile and the pancreas to secrete enzymes.

Gallbladder

A small, pear-shaped organ located beneath the liver, which stores and concentrates bile, a digestive fluid produced by the liver.