If the law of one price holds for all goods and the quantity theory of money determines the long-run price level, we can pin down:

Question

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If the law of one price holds and the quantity theory of money determines the long-run price level, then the long-run exchange rate can be determined based on the relative money supplies and the purchasing power parity relationship. This would allow us to pin down the long-run level of the exchange rate.

If the Law of One Price Holds for All Goods