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:

Question

Quizplus · Accepted Answer

The theory described is known as the law of one price. It states that identical goods should have the same price in different markets after adjusting for the exchange rate. If the prices are not the same, then there is an opportunity for arbitrage, where traders can buy in a cheaper market and sell in a more expensive market. Thus, the law of one price is a fundamental concept in international finance and is important for understanding exchange rate movements.

The Theory That Goods in a Foreign Country Should Be