2. Inflation Effects on Exchange Rates Assume that the U.S. inflation rate becomes low relative to Canadian inflation. Other thing being equal, how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar? (1 point) 3. Interest Effects on Exchange Rates Assume U.S. interest rates increase relative to British interest rates. Other thing being equal, how should this affect the (a) U.S. demand for British pounds, (b) supply of pounds for sale, and (c) equilibrium value of the pound? (1 point) 4. Speculation Assume the following information regarding U.S. and European annualized interest rates: 1- Currency Lending Rate Borrowing Rate U.S. Dollar ($) 6.73% 7.20% Euro () 6.80% 7.28% Trensor Bank can borrow either $10 million or 10 million. The current spot rate of the euro is $1.16. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.20 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.20 in 90 days? (2 point)