The law of one price ensures that no country's currency is overvalued.

Question

Quizplus · Accepted Answer

The law of one price states that identical goods or securities should have the same price in different markets when exchange rates are taken into account. However, this does not ensure that no country's currency is overvalued. Various factors such as economic growth, political stability, inflation rates, and interest rates can affect the value of a currency relative to others, leading to overvaluation or undervaluation.

The Law of One Price Ensures That No Country's Currency