Which of the following does not contribute to the failure of the law of one price?

If a firm in a perfectly competitive industry introduces a lower-cost way of producing an existing product, the firm will be able to earn economic profits in the long run

Indicate whether the statement is true or false

A permanent increase in the domestic money supply

A) must ultimately lead to a proportional decrease in E, and, therefore, the expected future exchange rate must rise proportionally. B) must ultimately lead to a proportional decrease in E, and, therefore, the expected future exchange rate must decrease proportionally. C) must ultimately lead to a proportional rise in E, and, therefore, the expected future exchange rate must rise proportionally. D) must ultimately lead to a proportional rise in E, and, therefore, the expected future exchange rate must rise more than proportionally. E) must ultimately lead to a proportional rise in E, and, therefore, the expected future exchange rate must rise less than proportionally.