Final answer:
Arbitrage is indeed the process of capitalizing on price differences of a good by buying low and selling high across different markets. It occurs both in goods and currency markets and can contribute to the alignment of international prices.
Step-by-step explanation:
True, arbitrage is the process of taking advantage of differences in prices of the same good by buying where the good is cheap and selling where it is expensive. This economic practice involves the simultaneous buying and selling of goods or currencies in different markets or in derivative forms to take advantage of differing prices for the same asset.
For instance, if a U.S. dollar is appreciating and is worth more in terms of other currencies, meaning it is strengthening, an arbitrageur might buy goods in a country where they are priced lower using a stronger currency and sell them in a country where they are priced higher.
Banks and financial networks may facilitate arbitrage by standardizing prices across regions. However, when transportation and communication are poor, there are more opportunities for arbitrage, such as buying products where abundant at a cheaper rate and then selling them for a profit where they are scarce.
As infrastructure improves, these opportunities may decrease, yet they still exist on international levels due to exchange rate differences, hence influencing the aligning of prices and exchange rates over time.