According to the Law of One Price

question 4

Multiple Choice

According to the law of one price

• A) a company can only charge one price for a product, no matter which nation the product is sold in.
• B) the price of gold should differ between nations.
• C) interest rates across nations should be the same when adjusted for exchange rates.
• D) goods that are easily tradable across nations should sell for the same price expressed in a common currency.

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Definitions:

Budget Deficits

Budget deficits describe the financial situation where a government's expenditures surpass its income, leading to a shortfall that must be financed through borrowing.

Stimulus Package

A set of government measures, typically involving spending and tax cuts, intended to boost economic activity during a downturn.

Great Recession

The severe global economic downturn that occurred from late 2007 through mid-2009, characterized by significant declines in economic activity worldwide.

Automatic Stabilizers

Automatic stabilizers are economic policies and programs, like unemployment insurance and progressive taxation, that automatically adjust to dampen economic fluctuations without additional government action.