Two homogeneous products from Germany and Brazil are being purchased b
Two homogeneous products from Germany and Brazil are being purchased by an American trader. The product from Germany is cheaper than the product from Brazil.
According to ________, the trader will purchase the products from Germany until the increased demand for the German product equalizes the price.
A) Arbitrage
B) Purchasing power parity
C) Law of one price
D) Exchange rate arbitrage
ANSWER
C
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