Register
What is the formal representation of the law of one​ price, if P is domestic price for good​ X, P* is foreign price for the same​ good, and E is the exchange rate​ (units of domestic currency per units
81.1k views
4 votes
What is the formal representation of the law of one​ price, if P is domestic price for good​ X, P* is foreign price for the same​ good, and E is the exchange rate​ (units of domestic currency per units of foreign​ currency)?

User Cesar Castro
by
3.8k points

1 Answer

5 votes

Answer:

P= EP*

Step-by-step explanation:

The formal representation implies the formula for the law of one price. This law highlights how exchange rate are used to derive the value of domestic products.

Thus to get the the value of domestic product (P) we multiply the value of the exchange rate (E) times the foreign currency price or value (P*).

User Nokome
by
3.4k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

3.6m questions

4.6m answers

Other Questions

How can expansionary​ expenditure-based fiscal policy lead to crowding out in the​ economy? A. ​Expenditure-based fiscal policy increases the national​ debt, inducing​ forward-looking households and firms
Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is $50,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation.
In order to attract younger customers to the Lacoste brand of clothing, CEO Robert Siegel made all of the major decisions in product planning, distribution, and promotion. He asked for no input from his
Andrew doesn’t want to spend a lot of money on student loans, and does not qualify for grants. what is his best option for affording a bachelors degree
The method of appraisal in which the appraiser estimates the replacement cost of the building, deducts depreciation, and adds the value of the site is:________
Link Copied!