Suppose inflation is higher in Canada over the next few months than in foreign countries, and exchange rates are given in terms of how much foreign currency a dollar buys or how many foreign goods Canadian goods buy. According to purchasing-power parity, which of the following should we expect to see?

Select one:

a.Both the real and nominal exchange rates appreciate.

b.Only the real exchange rate appreciates.

c.Both the real and nominal exchange rates depreciate.

d.Only the nominal exchange rate depreciates.