If Only One Good Is Traded Between Two Countries and the Price

question 25

Multiple Choice

If only one good is traded between two countries and the price of the good is the same in both countries when expressed in units of the same currency, then

• A)people have rational expectations.
• B)both countries have the same monetary policy.
• C)there is interest-rate parity.
• D)the law of one price holds.

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Definitions:

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for fast action in situations perceived as stressful or dangerous, often known as the "fight or flight" response.

Stimulates Digestion

The process or action that encourages the digestive system to break down food more effectively, potentially through the release of digestive enzymes or the promotion of gut motility.

Accelerates Heartbeat

Causes an increase in the speed of heart contractions, often as a response to exercise, stress, or excitement.

Endocrine System

A network of glands in the body that secrete hormones into the bloodstream to regulate various bodily functions.