A country's nominal exchange rate, e, is defined as the number of units of:
A)domestic goods relative to the number of units of foreign goods.
B)foreign goods relative to the number of units of domestic goods.
C)the foreign currency that one unit of the domestic currency will buy.
D)the domestic currency that one unit of the foreign currency will buy.

Question

Quizplus · Accepted Answer

The advantage of defining the nominal exchange rate this way implies that an increase in e corresponds to an appreciation, or a strengthening, of the home currency, and a decrease in e corresponds to a depreciation, or a weakening, of the home currency.

A Country's Nominal Exchange Rate, E, Is Defined as the Number