Suppose the domestic money market is in equilibrium. Explain if the following statement is true or false: "All else equal, a decrease in the domestic price level causes an increase in the domestic interest rate to preserve the money market equilibrium." Support your answer with a graph of the money market and with the money market equilibrium equation.

Suppose that over 15 years, from 2005 to 2020, Canadian prices rose by 12% less than U.S. prices. Explain if the following statement is true or false: "For relative purchasing power parity to hold, the U.Sdollar must have appreciated 12% against the Canadian dollar over the same period.'' Use the relative PPP equation to support your answer.