Question: Inflation diffrential between two countries impact the demand and supply of currencies. If there is an increase in inflation rate in US and Eurpoean countries

Inflation diffrential between two countries impact the demand and supply of currencies. If there is an increase in inflation rate in US and Eurpoean countries do not experience any change in inflation rate, which of the following would take place as a result: (assume all other things are constant)

an increased U.S. demand for euros and an increased supply of euros for sale

a decreased U.S. demand for euros and an increased supply of euros for sale

a decreased U.S. demand for euros and a decreased supply of euros for sale.

an increased U.S. demand for euros and a decreased supply of euros for sale

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