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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Lessons that economists and policy makers have learned from the recent global financial crisis include
A) Developments in the financial sector have a far greater impact on economic activity than was earlier realized. B) The zero lower bound on interest rates can be a serious problem. C) The cost of cleaning up after a financial crisis is very high. D) Price and output stability do not ensure financial stability. E) All of the above.
The term "utility" means
a. satisfaction b. a low-valued good c. productivity d. adaptability e. efficiency