If the Real Exchange Rate Between Canada and Japan Remains

Multiple Choice

If the real exchange rate between Canada and Japan remains unchanged, and the inflation rate in Canada is 6 percent and the inflation rate in Japan is 3 percent, the:

A) dollar will appreciate by 3 percent against the yen.
B) yen will appreciate by 3 percent against the dollar.
C) yen will appreciate by 6 percent against the dollar.
D) yen will appreciate by 9 percent against the dollar.