According to Purchasing-Power Parity, If Prices in Canada Increase by a Larger

Multiple Choice

According to purchasing-power parity, if prices in Canada increase by a larger percentage than prices in Kenyan, how does the exchange rate change?

A) The real exchange rate, defined as Kenyan goods per unit of Canadian goods, rises.
B) The real exchange rate, defined as Kenyan goods per unit of Canadian goods, falls.
C) The nominal exchange rate, defined as Kenyan currency per dollar, rises.
D) The nominal exchange rate, defined as Kenyan currency per dollar, falls.