The Hypothesis That the Price of Some Given Internationally Traded

question 14

Multiple Choice

The hypothesis that the price of some given internationally traded product in one country will be equal to the price of the same product in some other country is known as

• A)comparative advantage.
• B)gains from trade.
• C)the Big Mac index.
• D)the law of one price.
• E)absolute advantage.

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Definitions:

Geometric Average

A method of calculating the average rate of return of a set of values that is compounded over time.

Arithmetic Average

A measure of central tendency calculated by dividing the sum of all values in a dataset by the number of values.

Geometric Average Returns

A method of calculating the average rate of return of an investment which accounts for the compound interest over time, often used to compare investment performance.

Dividend Yield

A financial metric that compares a company's annual dividend payments to its stock price.