For purchasing power parity to hold, we require prices to be flexible. In the short run, prices are sticky (not flexible) so PPP is not a good theory for explaining exchange rates in the short run. b) No, the law of one price does not necessarily hold for each good. PPP pertains to price levels, which are an average of individual goods prices, so that individual goods' prices may offset eachother in such a way to preserve PPP while the LOOP does not hold for each good. (student should provide an example that works)