%3Cp%20class%3D%22MsoListParagraphCxSpFirst%20c4%22%3E%3Cspan%20class%3D%0A%22c3

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%3Cp%20class%3D%22MsoListParagraphCxSpFirst%20c4%22%3E%3Cspan%20class%3D%0A%22c3%22%3E%3Cspan%20class%3D%22c2%22%3Ea)%20%3Cspan%20class%3D%0A%22c1%22%3E%20%26nbsp%3B%26nbsp%3B%26nbsp%3B%3C%2Fspan%3E%3C%2Fspan%3E%3C%2Fspan%3E%20Purchasing%20power%0Aparity%20(PPP)%20is%20a%20theory%20of%20exchange%20%E2%80%93rate%20behavior%20(a)%3Cbr%20%2F%3E%3C%2Fp%3E%0A%3Cp%20class%3D%22MsoListParagraphCxSpMiddle%20c4%22%3E%3Cspan%20class%3D%0A%22c3%22%3E%3Cspan%20class%3D%22c2%22%3Eb)%3Cspan%20class%3D%0A%22c1%22%3E%26nbsp%3B%26nbsp%3B%26nbsp%3B%26nbsp%3B%26nbsp%3B%3C%2Fspan%3E%3C%2Fspan%3E%3C%2Fspan%3E%20Explain%0Awhy%20the%20real%20exchange%20rate%20never%20changes%20under%20the%20theory%20of%0APurchasing%20power(b)%3C%2Fp%3E%0A%3Cp%20class%3D%22MsoListParagraphCxSpMiddle%20c4%22%3E%3Cspan%20class%3D%0A%22c3%22%3E%3Cspan%20class%3D%22c2%22%3Ec)%3Cspan%20class%3D%0A%22c1%22%3E%26nbsp%3B%26nbsp%3B%26nbsp%3B%26nbsp%3B%26nbsp%3B%26nbsp%3B%3C%2Fspan%3E%3C%2Fspan%3E%3C%2Fspan%3E%20What%0Agoverns%20the%20behavior%20of%20nominal%20exchange%20rates%20under%20PPP%3F%0A%3Cspan%20class%3D%22c5%22%3E%26nbsp%3B%3C%2Fspan%3EUnder%20what%20conditions%20%3Cspan%20class%3D%0A%22c5%22%3E%26nbsp%3B%3C%2Fspan%3Eare%20nominal%20exchange%20rates%20sticky%3F(c)%3C%2Fp%3E%0A%3Cp%20class%3D%22MsoListParagraphCxSpLast%20c4%22%3E%3Cspan%20class%3D%0A%22c3%22%3E%3Cspan%20class%3D%22c2%22%3Ed)%3Cspan%20class%3D%0A%22c1%22%3E%26nbsp%3B%26nbsp%3B%26nbsp%3B%26nbsp%3B%26nbsp%3B%3C%2Fspan%3E%3C%2Fspan%3E%3C%2Fspan%3E%20Suppose%0Athat%20inflation%20in%20the%20US%20is%204%25%20while%3Cspan%20class%3D%22c5%22%3E%26nbsp%3B%3C%2Fspan%3E%0Ain%20the%20rest%20of%20the%20world%20it%20is%207%25.%20Under%20PPP%20how%20does%20E%20change%0Aovertime%20.%20Does%20the%20dollar%20appreciate%20or%20depreciate%20%3F(d)%3C%2Fp%3E%0A

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