If U.S. inflation is 4 percent, Japans inflation is 1 percent, and the nominal U.S. dollar exchange

Question:

If U.S. inflation is 4 percent, Japan’s inflation is 1 percent, and the nominal U.S. dollar exchange rate falls by 3 percent relative to the yen, what happens to the real exchange rate?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...

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