The nominal exchange rate is
A) the difference between a country's imports and exports
B) the price of a loan, expressed as a percentage
C) the rate at which labor substitutes for capital in the production function
D) the rate at which one currency can be traded for another
E) the number of times a dollar changes hands for transactions in a given period

Question

Quizplus · Accepted Answer

The nominal exchange rate is the rate at which one currency can be traded for another, such as how many U.S. dollars are needed to buy one euro. It is the price of one currency in terms of another. The other options, such as imports and exports, loan prices, and the production function, are unrelated to the nominal exchange rate.

The Nominal Exchange Rate Is