A good background for the topics here discussed should already have been
established from earlier recommended readings for this lesson. In particular,
you can work through Chapter 11 of N. Gregory Mankiw's intermediate text,
Macroeconomics. Also, an excellent discussion of purchasing
power parity can be found in Chapter 15 of Paul R. Krugman and Mauice Obstfeld,
International Economics, Theory and Policy, published by Addison
Wesley. That chapter is basically the same in the 6th, 7th and 8th editions.