Suppose that the exchange rate between Canadian dollars and the Thai baht is established in a flexible exchange market without any intervention from the Bank of Canada.If the rate of inflation in Thailand falls relative to the Canadian inflation rate, indicate what will happen to the exchange rate.Be sure to indicate whether the demand curve for thebaht, the supply curve for thebaht, or both are affected.

Demand will

.

Supply will

.

The exchange rate

.

Will the dollar appreciate or depreciate?