Author Question: The law of one price (LOOP) indicates that: a. The price of a good in one country should be equal ... (Read 36 times)

abern · **on:** Jun 30, 2018

The law of one price (LOOP) indicates that:
a. The price of a good in one country should be equal to the exchange-rate-adjusted price of the same product in another country.
b. The nominal wage rate in one country should be equal to the exchange-rate-adjusted wage of the average laborer in another country.
c. All the above.
d. None of the above.
e. Nominal interest rates in countries should be identical because if they were not, arbitragers could make risk-free profits.

Question 2

Which of the following is not an exchange rate system?
a. Purchasing power parity
b. Fixed exchange rates
c. Flexible exchange rates
d. Fixed rates within bands
e. Managed floating