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Inflation Effects on Exchange Rates - Assume that the U.S. inflation rate becomes low relative to Canadian inflation. Other things being equal, how should this affect the U.S. demand for Canadian dollars, supply of Canadian dollars for sale, and the equilibrium value of the Canadian dollar? The demand for Canadian dollars increases, the supply for Canadian dollars increases, and the Canadian dollar's value increases. The demand for Canadian dollars increases, the supply for Canadian dollars decreases, and the Canadian dollar's value increases. The demand for Canadian dollars increases, the supply for Canadian dollars increases, and the Canadian dollar's value decreases. The demand for Canadian dollars decreases, the supply for Canadian dollars increases, and the Canadian dollar's value decreases. It is not possible to say ex-ante what will the effect be. We would need information on the relative inflation differential between the two countries