Question 1:

The law of one price

1. always holds because every good has the same price throughout the entire market.

2. implies that the domestic and foreign price levels will be the same when prices are measured in the same currency.

3. says that any given good will have the same price in every country when the prices are measured in any given currency.

4. holds when prices are considered net of transport costs, tariffs, taxes, subsidies and other impediments, but only for goods that are internationally traded.

Choose the correct option.