Problem
1. (Foreign Exchange) What is the difference between a depreciation of the dollar and a devaluation of the dollar?
2. (Purchasing Power Parity) According to the theory of purchasing power parity, what will happen to the value of the dollar (against foreign currencies) if the U.S. price level doubles and price levels in other countries remain constant? Why is the theory more suitable to analyzing events in the long run?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.