Let's discuss prices and exchange rates this week. Firstly, what is the law of one price? When does the law of one price

[answerhappygod]

Let's discuss prices and exchange rates this week. Firstly, whatis the law of one price? When does the law of one price hold andwhen does it appear not to be true? For something that's called a"law", why is the empirical support for purchasing powerparity (PPP) and the law of one price so weak in recent data? Also,explain why price levels are lower in poorer countries. And how doexchange rates fit into all of this?
Lastly, here's a fun question. The Economist developed a "BigMac index" to estimate PPP by looking at the price of a Big Macacross the globe. [1] If you were going to develop your ownmeasure of PPP, what good or product would you use? Explainwhy you chose it. I recommend a good/product that has consistentquality and is broadly available in many countries. For example, ifI were going to develop my own PPP index, I would use the price ofNetflix. [2]