a) Assume that the U.S. inflation rate becomes high relative to Canadian inflation. Other things being equal, how should this affect the (1) U.S. demand for Canadian dollars, (2) supply of Canadian dollars for sale, and (3) equilibrium value of the Canadian dollar?
b) Assume U.S. interest rates increase relative to British interest rates. Other things being equal, how should this affect the (1) U.S. demand for British pounds, (2) supply of pounds for sale, and (3) equilibrium value of the pound?