Session 14 - Summary of third part

If exchanges rates are determined by PPP theory, then:
The Doha Round concluded. Our country had great negotiators but the rest of the world had very bad ones, so the rest of the world will reduce its tariff significantly and we will do “nada”. Which of the following is correct?
Assume that the law of one price holds for all goods. Which of the following statements is true ? I. The real exchange rate is 1. II. There is no possibility for arbitrage between currencies. III. The nominal exchange rate between the currencies of two countries is equal to the relative price level between those two countries.