Question
If the Law of One Price holds then I. Changes in
national saving do not affect the real exchange rate II. Changes in investment spending do affect the real exchange rate III. When the real exchange rate is fixed, then any change in the nominal exchange rate must be due to changes in the price levels in either of the two countries Which of the above statements is true?Solution
The Law Of One Price (referred to as LOOP) is an economic theory which states that the price of identical goods in various markets must be the same after taking into consideration the currency exchange, i.e. when the prices are expressed in the same currency. The law applies mainly to securities traded on financial markets. LOOP forms the basis of the purchasing power parity principle. The assertion, in some cases, would cost exactly the same number.
Who among the following from Uttarakhand was honored with GLOBAL GREEN AWARD 2021?
What is the primary objective of Viksit Bharat Sankalp Yatra?
Which of the following correctly defines the Kessler Syndrome?
Which of the following methods can be used to control deficient demand in the economy?
Where did the Wings India 2024 event hold in January 2024?
Who has been chosen by the Board of Control for Cricket in India as the official partner for the domestic and international seasons?
Which Indian player has won the doubles title in the women's tennis hardcourt event in Spain?
India ranked __________ in the Global Innovation Index (GII) 2024, which ranks 133 global economies.
Which country has officially joined the New Development Bank (NDB) in May 2025?
Which ministry organized the State Conclave on the Yuga Yugeen Bharat Museum in August 2024?