According to purchasing power parity, if the Federal Reserve increased the money supply leading to higher U. S. inflation, then
(a) U. S. prices would rise and the nominal exchange rate would rise.
(b) U. S. prices would rise and the nominal exchange rate would fall.
(c) U. S. prices would fall and the nominal exchange rate would rise.
(d) U. S. prices and the nominal exchange rate would fall.
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