According to purchasing-power parity, if the dollar price of oil is higher in New York than in London, arbitrageurs will ___ oil in New York and _____ oil in London to drive _____ the price of oil in New York.
A) buy; sell; up
B) buy; sell; down
C) sell; buy; up
D) sell; buy; down

Question

Quizplus · Accepted Answer

According to purchasing-power parity, if the dollar price of oil is higher in New York than in London, arbitrageurs will sell oil in New York (where the price is higher) and buy oil in London (where the price is lower) to drive down the price of oil in New York. This process helps in equalizing the price differences due to arbitrage.

According to Purchasing-Power Parity, If the Dollar Price of Oil