Question

Holding other things constant, a decrease in the inflation rate in the US compared to the Canadian economy will cause the demand for the Canadian dollar to

Answer 1

Answer: To decrease, and the supply for Canadian dollar to increase.

Explanation: Inflation is an increase in the general price levels within an economy over a given period of time, when their is inflation in a given economy it causes the depreciation of the value of the currency of that economy and hence reduced demands for that currency and an increase in the supply for that currency which in this case is the Canadian dollar.