$1.$Explain the theory of purchasing power parity $($PPP$).$ Based on this theory, what is a general forecast of the values of curren$$cies in countries with high inflation?

$2.$ Explain the international Fisher effect $($IFE$).$ What is the rationale for the existence of the IFE? What are the implications of the IFE for firms with excess cash that consis$$tently invest in foreign Treasury bills? Explain why the IFE may not hold.