Which of the Following Statements Describes the Difference Between the Law

question 18

Multiple Choice

Which of the following statements describes the difference between the law of one price and purchasing power parity (PPP) ?

• A) The law of one price requires prices to be identical across countries, and PPP requires exchange rates to be identical across countries.
• B) The law of one price means that all products move toward equal prices, and PPP means that prices are fair but not necessarily equal across markets.
• C) The two terms are different names for the same concept.
• D) The law of one price applies to an individual product, and PPP applies to a market basket of products.

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Definitions:

Cognitive Distortions

Inaccurate or irrational thoughts and belief systems that reinforce negative thinking and emotions.

Depression

A mental health disorder characterized by persistently depressed mood or loss of interest in activities, leading to significant impairment in daily life.

Activity Scheduling

A cognitive-behavioral therapy technique involving the planning of positive activities to increase a person's engagement and enjoyment.

Behavioural Experiments

Techniques in cognitive-behavioral therapy where individuals test the validity of their beliefs through experimentation.