« previous next »

Author Question: Briefly explain the theory of purchasing power parity and the law of one price. What will be an ... (Read 89 times)

stock

  • Hero Member
  • *****
  • Posts: 573
on: Jul 7, 2018
Briefly explain the theory of purchasing power parity and the law of one price.
 
  What will be an ideal response?

Question 2

One advantage of importing is that an importer can diversify its operating risks by developing alternative suppliers.
 
  Indicate whether the statement is true or false
International Business ¦ Daniels, Radebaugh, Sullivan ¦ 16th Edition
Buy Test-Bank


whitcassie

  • Sr. Member
  • ****
  • Posts: 298
Reply #1 on: Jul 7, 2018
Answer to Question 1

The theory of purchasing power parity states that the prices of tradeable goods, when expressed in a common currency, will tend to equalize across countries as a result of exchange rate changes. The law of one price states that arbitrage will continue until the price of the good in question is identical in both markets (excluding transaction, transportation and other costs).

Answer to Question 2

TRUE


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Bacteria have been found alive in a lake buried one half mile under ice in Antarctica.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

Did you know?

Stevens-Johnson syndrome and Toxic Epidermal Necrolysis syndrome are life-threatening reactions that can result in death. Complications include permanent blindness, dry-eye syndrome, lung damage, photophobia, asthma, chronic obstructive pulmonary disease, permanent loss of nail beds, scarring of mucous membranes, arthritis, and chronic fatigue syndrome. Many patients' pores scar shut, causing them to retain heat.

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

Persons who overdose with cardiac glycosides have a better chance of overall survival if they can survive the first 24 hours after the overdose.

Hydroelectric Power Hydroelectric Power
Acid Rain and Power Plant Emissions Acid Rain and Power Plant Emissions
The schematic of a variable valve timing control circuit, showing that battery power (+) is being ... The schematic of a variable valve timing control circuit, showing that battery power (+) is being ...
Terminals 85 and 86 represent the coil inside the relay. Terminal 30 is the power terminal, 87a is ... Terminals 85 and 86 represent the coil inside the relay. Terminal 30 is the power terminal, 87a is ...
The James-Lange Theory of Emotion The James-Lange Theory of Emotion
The Cannon-Bard Theory of Emotion The Cannon-Bard Theory of Emotion
Video: Hip Animation

For a complete list of videos, visit our video library