An exchange rate
A) is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports.
B) measures the interest rate ratios of any two nations.
C) is the amount that one nation must export to obtain $1 worth of imports.
D) is the price that the currencies of any two nations exchange for one another.

Question

Quizplus · Accepted Answer

An exchange rate is the price at which the currencies of two nations exchange for each other. It measures the value of one currency in relation to another. Therefore, option D is the correct answer. Options A, B, and C are incorrect as they do not define exchange rates accurately.

An Exchange Rate