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2. Consider the following data comparing three nations' exchange rates in terms of the U.S. dollar in 1974 and 1988 (units of foreign currency/dollar). 1974
2.Consider the following data comparing three nations' exchange rates in terms of the U.S. dollar in 1974 and 1988 (units of foreign currency/dollar).
1974 1988
Iceland (krona0.9943.03
Taiwan (dollar)38.028.5
Turkey (lira)14.01419
If purchasing-power-parity held in 1974 and 1988, which of these countries experienced a greater inflation rate than the U.S. between 1974 and 1988?In your answer, explain the theory of purchasing-power-parity.
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