If income elasticity is positive, a product is inferior

The starting point for understanding how exchange rates are determined is a simple idea called ________, which states: if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country

produces it. A) Gresham's law B) the law of one price C) purchasing power parity D) arbitrage

Two goods, X and Y, are called substitutes if

a. an increase in PX causes more Y to be bought. b. an increase in PX causes less Y to be bought. c. an increase in PY causes less Y to be bought. d. an increase in income causes more of both X and Y to be bought.