Question 1
The law of one price states that if the costs of transportation are ________, the price of the same good in different countries should be ________.
◦ large; roughly the same
◦ large; exactly the same
◦ small; very different
◦ small; roughly the same
Question 2
The theory of international exchange that holds that exchange rates are set so that the prices of ________ goods in different countries is ________ is the purchasing power parity theory.
◦ similar; the same
◦ nondurable; negotiable
◦ different; the same
◦ durable; fixed