The Starting Point for Understanding How Exchange Rates Are Determined

question 78

Multiple Choice

The starting point for understanding how exchange rates are determined is a simple idea called ________,which states that if two countries produce an identical good,the price of the good should be the same throughout the world no matter which country produces it.

• A) Gresham's law
• B) the law of one price
• C) purchasing power parity
• D) arbitrage

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