If the law of one price is working, then:

Question

Quizplus · Accepted Answer

The law of one price suggests that in the absence of transportation costs and barriers to trade, identical goods should sell for the same price in different countries when prices are expressed in a common currency. This concept is closely related to purchasing power parity (PPP), which holds that in the long run, exchange rates should adjust to equalize the price of an identical basket of goods in any two countries.

If the Law of One Price Is Working, Then