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This posting addresses the law of one price.

A logical starting point for understanding how exchange rates are determined is a simple idea called ___________, which states that if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it.

Gresham's law
the law of one price
purchasing power parity
arbitrage

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A logical starting point for understanding how exchange rates are determined is a simple idea called ___________, which states that if two countries produce an identical good, the price of the good ...

Solution Summary

The solution explains the law of one price in relation to the determination of exchange rates.

$2.19