Higher inflation in the United States relative to that in Ca

Higher inflation in the United States relative to that in Canada, ceteris paribus, is predicted to cause a(n): decrease in the supply of U.S. dollars. Increase in the demand for U.S. dollars. Decrease in the price of the U.S. dollar in terms of the Canadian dollar. Increase in the price of the U.S. dollar in terms of the Canadian dollar.

Solution

C. Decrease in the price of the U.S. dollar in terms of the Canadian dollar

In the graph the price of the U.S. dollar which is mentioned as 1.0 will decrease.