When people take advantage of differences in prices for the same good by buying it where it is cheap and selling it where it is expensive, it is known as
A) net exports.
B) purchasing power parity.
C) net capital outflow.
D) currency appreciation.
E) arbitrage.

Question

Quizplus · Accepted Answer

The given scenario is an example of arbitrage, which involves taking advantage of price differences for the same good in different markets. Net exports refers to the value of a country's exports minus the value of its imports, purchasing power parity is the theory that exchange rates should adjust to equalize the buying power of different currencies, net capital outflow refers to the difference between a country's investments abroad and foreign investments within the country, and currency appreciation refers to an increase in the value of a currency relative to other currencies. None of these concepts accurately describe the given scenario.

When People Take Advantage of Differences in Prices for the Same