True, False, Uncertain. Explain. Q.1 A rise in the Canadian interest rate R$ relative to European rates raises Canadian money demand L(R$, YC) thereby causing a proportional appreciation of the dollar against the euro.

Q.2 An increase in the money supply lowers the interest rate while a fall in the money supply raises the interest rate, given the output level.

Q.3 A permanent increase in a country's money supply causes a proportional short-run depreciation of its currency against foreign currencies.