In an open economy,the law of one price implies that

Question

Quizplus · Accepted Answer

The law of one price implies that identical goods should have the same price in different countries. In an open economy, this means that purchasing power parity should hold, which states that exchange rates should adjust to reflect the relative prices of goods in different countries. Therefore, choice C is the correct answer. Choices A, B, and D are not directly related to the law of one price.

In an Open Economy,the Law of One Price Implies That