In each of the following scenarios, suppose that the two nations are the only trading nations in the world. Given inflation and the change in the nominal exchange rate, which nation’s goods become more attractive?

a. Inflation is 10% in Canada and 5% in Japan; the Canadian dollar–Japanese yen exchange rate remains the same.

b. Inflation is 3% in Canada and 8% in Mexico; the price of the Canadian dollar falls from 12.50 to 10.25 Mexican pesos.

c. Inflation is 5% in Canada and 3% in the euro area; the price of the euro falls from $1.30 to $1.20.

d. Inflation is 8% in the United States and 4% in Canada; the price of the Canadian dollar rises from C$0.60 to C$0.75.