Macroeconomics 13th Edition by William Baumol ,Alan Blinder

Exercise 11

During the first half of the₁980s, inflation in (West) Germany was consistently lower than that in the United States. What, then, does the purchasing-power parity theory predict should have happened to the exchange rate between the mark and the dollar between 1980 anD₁985 (Look at Table₁ to see what actually happened.)