The Law of One Price Holds Exactly Only If

question 52

Multiple Choice

The law of one price holds exactly only if

• A)antitrust laws are being enforced.
• B)buyers have complete information.
• C)transactions costs are zero.
• D)it is impossible for buyers to resell the good.

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Definitions:

Balance of Trade

The difference between a country's exports and imports of goods and services.

Exports

Goods or services sold by a country to buyers in other countries, contributing to the exporting nation’s economy.

Imports

Goods or services brought into one country from another to satisfy domestic consumption or production needs.

Exchange Rate

The price at which one currency can be exchanged for another, playing a critical role in international trade and finance.