The ________ suggests that given relatively efficient markets, the price of a "basket of goods" should be roughly equivalent in each country.
A) random walk theory
B) theory of competitive advantage
C) theory of price inflation
D) purchasing power parity theory

Question

Quizplus · Accepted Answer

If the law of one price were true for all goods and services, the PPP exchange rate could be found from any individual set of prices. By comparing the prices of identical products in different currencies, it would be possible to determine the "real" or PPP exchange rate that would exist if markets were efficient.

The ________ Suggests That Given Relatively Efficient Markets, the Price