Can Purchasing-Power Parity Be Used to Explain the Fact That

question 160

Essay

Can purchasing-power parity be used to explain the fact that the U.S. dollar has depreciated by more than 50 percent against the German mark between 1970 and 1998, but appreciated by more than 100 percent against the Italian lira during the same period? Defend your answer.

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Definitions:

Fiscal Policy

Government policies related to taxation and spending to influence the economy.

Treasury Department

A sector of the government responsible for managing government revenue, including producing coins and bills, issuing Treasury bonds, and other financial instruments.

Administration

The management and organization of all the activities of a government or institutional body.

Edward Snowden

Edward Snowden is a former National Security Agency contractor who leaked classified information in 2013, revealing global surveillance programs.