Please Define the Following Key Terms

question 40

Short Answer

Please define the following key terms.
-Desiderius Erasmus

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Definitions:

Currency Cross Rate

The exchange rate between two currencies, calculated based on their common exchange rates with a third currency, usually the US dollar, without needing direct exchange between the two currencies.

Exchange Rate

The price at which one currency can be exchanged for another currency.

Third Currency

A currency used as an intermediary for trading between two currencies that are not directly exchangeable.

Law of One Price

An economic theory that suggests the price of an identical good will have the same price globally, assuming no transportation costs and no differential taxes.