3. Below are the values of price indexes for Greece and Germany, and the exchange rate (drachmas/German mark). 1984 1986 E 39.6 64.6 PGR 11.2 16.5 PGER a. 61.8 63.0 Based on purchasing power parity, by how much would the drachma have been expected to change between 1984 and 1986 (give the proportional change)? (HINT: Assume PPP holds in both years, and then calculate the proportional change in the implied exchange rate. Since you're going to calculate the proportional change, the fact that you're using price indexes, rather than price levels in monetary units, does not create a problem.) What was the actual change (proportional change) of the drachma? By how much did the real exchange rate change (give the proportional change) between 1984 and 1986? (HINT: Calculate the real exchange rate in both years, using the values of the price index and E. The levels of the real exchange rate don't mean anything, since you've used price indexes rather than price levels in monetary units. Then calculate the proportional change; for the proportional change, the fact that you've used price indexes doesn't matter.) b. 3. Below are the values of price indexes for Greece and Germany, and the exchange rate (drachmas/German mark). 1984 1986 E 39.6 64.6 PGR 11.2 16.5 PGER a. 61.8 63.0 Based on purchasing power parity, by how much would the drachma have been expected to change between 1984 and 1986 (give the proportional change)? (HINT: Assume PPP holds in both years, and then calculate the proportional change in the implied exchange rate. Since you're going to calculate the proportional change, the fact that you're using price indexes, rather than price levels in monetary units, does not create a problem.) What was the actual change (proportional change) of the drachma? By how much did the real exchange rate change (give the proportional change) between 1984 and 1986? (HINT: Calculate the real exchange rate in both years, using the values of the price index and E. The levels of the real exchange rate don't mean anything, since you've used price indexes rather than price levels in monetary units. Then calculate the proportional change; for the proportional change, the fact that you've used price indexes doesn't matter.) b