1. Hyperinflation in Turkey (beginner). Turkey experienced hyperinflation in the late 1990s and early 2000s. The exchange rate stood at Turkish lira (TRY) 650,000

= US$1 on January 1, 2000. With actual quarterly rates of inflation in 2000 and 2001 at 35 percent (but only 2.5 percent annually in the USA), the central bank of Turkey implemented a policy of mini-devaluation at the rate of 7.5 percent monthly devaluation.

a. What would be the official exchange rate on February 1, 2001?

b. What would be the official exchange rate on December 31, 2001? (Use monthly compounding.)

c. Was the Turkish lira properly valued?