The law of one price (LOOP) indicates that:
a. The price of a good in one country should be equal to the exchange-rate-adjusted price of the same product in another country.
b. The nominal wage rate in one country should be equal to the exchange-rate-adjusted wage of the average laborer in another country.
c. All the above.
d. None of the above.
e. Nominal interest rates in countries should be identical because if they were not, arbitragers could make risk-free profits.
.A
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Refer to Figure 18.2. In autarky, the maximum amount of fishing poles that Macadamia can produce is
A) 40. B) 100. C) 120. D) 160.
A currency system in which governments try to keep the values of their currencies constant against another is called a ________ exchange rate system
A) flexible B) consistent C) fixed D) stable
In a perfectly competitive market, if market price is higher than the average total cost of production, ________
A) firms will incur losses in the long run B) firms will make profits in the long run C) new firms will enter the industry D) firms will exit the industry
The demand curve facing Company ABC is perfectly elastic. What is its marginal revenue?
A. Equal to the average revenue B. Less than the price C. Higher than the price D. Higher than the average revenue