Asked by rahel khosravi on Jul 11, 2024
Verified
The nominal exchange rate is the
A) nominal interest rate in one country divided by the nominal interest rate in the other country.
B) ratio of a foreign country's interest rate to the domestic interest rate.
C) rate at which a person can trade the currency of one country for another.
D) real exchange rate minus the inflation rate.
Nominal Exchange Rate
The speed at which one form of currency can be traded for another.
Currency
A system of money in general use in a particular country or economic context.
Real Exchange Rate
The value of a currency in terms of another currency, adjusted for differences in price levels between countries.
- Separate the concepts of nominal and real exchange rates and grasp their economic ramifications.
Verified Answer
HJ
Halla JabaiehJul 12, 2024
Final Answer :
C
Explanation :
The nominal exchange rate is defined as the rate at which one can exchange the currency of one country for the currency of another. This is a direct measure of how much of one currency can be exchanged for a certain amount of another currency.
Learning Objectives
- Separate the concepts of nominal and real exchange rates and grasp their economic ramifications.