Assume that you believe exchange rate movements are mostly driven by purchasing power parity. The U$.$S$.$ and Canada presently have the same nominal $($quoted$)$ interest rate. The central bank of Canada just made an announcement that causes you to revise your estimate of Canada's real interest rate upward. Nominal interest rates were not affected by the announcement. Do you expect that the Canadian dollar to appreciate, depreciate, or remain the same A increase in the real interest rate $($with no change in the nominal interest rate$)$ means that Canada's expected inflation rate is

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$.$ This new information causes an expected

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in U$.$S$.$ demand for Canadian dollars and$/$or

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supply of Canadian dollars to be exchanged for U$.$S$.$ dollars $($due to international trade with the U$.$S$.),$ which results in a

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Canadian dollar.

A increase in the real interest rate $($with no change in the nominal interest rate$)$ means that Canada's expected inflation rate is