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1.Under the law of one price of an internationally traded commodity in one nation in a two-nation world is equal to the exchange rate times
1.Under the law of one price of an internationally traded commodity in one nation in a two-nation world is equal to the exchange rate times the price of the same commodity in the other nation. Asssuming that such a law holds, explain why, if the first nation would otherwise face no inflation at home, it will not be able to maintain in the long run both constant price and a constant exchange rate in the face of inflation in the other nation.
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