1. In the wake of the COVID-19 pandemic, firms seem to be investing in new technologies and reallocating labor in ways that raise the productivity of tradables much more than nontradables. This is unlikely to be a short-term phenomenon. The extent and significance of this effect vary across countries. Some countries are experiencing larger increases in the relative productivity of tradables vs. nontradables than others. As a result of this phenomenon, in the long run, we should expect the currencies in countries with greater relative productivity gain in tradables to

a)remain unchanged relative to currencies of other countries.

a)appreciate or depreciate depending on the situation.

b)appreciate relative to currencies of other countries.

depreciate relative to currencies of other countries