>This may be a stupid question, but why would making more stuff per hour
>worked make the stuff you make more expensive (i.e., make your currency
>go up) in markets for traded goods?
Think of it this way: the progressive more productive country is able to buy progressively more of other countries' manufactures; the progressively less productive country, progressively less. The first corresponds to an appreciating currency, the second, a depreciating one.
Doug