The price of one currency in terms of another country's currency is known as the
A) nominal exchange rate.
B) real exchange rate.
C) relative inflation rate.
D) purchasing power parity rate.

Question

Quizplus · Accepted Answer

The nominal exchange rate is the price of one currency in terms of another country's currency. The real exchange rate is adjusted for inflation, the relative inflation rate refers to the difference in inflation rates between countries, and purchasing power parity is a theory about how exchange rates should adjust to equalize the costs of a basket of goods in different countries.

The Price of One Currency in Terms of Another Country's