The theory that goods in a foreign country should be priced approximately equal after currency translation to goods in a host country is referred to as the law of:
A)Exchange rates
B)Large numbers
C)Spot rates
D)One price

Question

Quizplus · Accepted Answer

The theory that goods in a foreign country should be priced approximately equal after currency translation to goods in a host country is referred to as the law of one price. This means that the same good should have the same price in different markets after accounting for exchange rates and transaction costs. The law of one price is a fundamental concept in international economics and plays a key role in determining exchange rates between currencies.

The Theory That Goods in a Foreign Country Should Be