1) Explain its assumptions and discuss the Purchasing Power Parity Theorem. How can we forecast the future FX rates according to the model? Is the model reliable in forecasting the FX rates? What are the criticisms of the Purchasing Power Parity Theorem? 2) Currently the spot rate is 7.65TL/S. If last year the FX rate was 5.75TUS, how much TL depreciated against the US$? 3) What are the tools the CB can use in controlling the level of the FX rates? What are the advantages and disadvantages of an overly devaluated domestic currency in the case of Turkey