The law of one price (LOOP) indicates that:
a. Nominal interest rates in countries should be identical because if they were not, arbitragers could make risk-free profits.
b. The price of a good in one country should be equal to the exchange-rate-adjusted price of the same product in another country.
c. The quantity produced of a good in one country should be equal to the exchange-rate-adjusted quantity produced of the same product in another country.
d. The nominal wage rate in one country should be equal to the exchange-rate-adjusted wage of the average laborer in another country.
e. All the above.
.B
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One important consequence of the confirmation bias is that:
A. Some people cannot correct a personal trait that might be causing them to fail in many ventures B. Someone could persist in pursuing a failed policy despite overwhelming evidence of the failure C. Bad decisions can be made because people will act without pausing to see whether their intuition is correct or not D. Some people may wrongly believe in their forecasting ability to predict future outcomes of risky investments
If the Fed raises the interest rates on short-term U.S. government bonds, then the Security Market Line shifts:
A. Downward as the risk-free interest rate increases B. Downward as the risk-free interest rate decreases C. Upward as the risk-free interest rate increases D. Upward as the risk-free interest rate decreases