A weighted average of the exchange rates between the domestic currency and the nation's most important trade partners is called:

Question

Quizplus · Accepted Answer

The effective exchange rate is a weighted average of the exchange rates between the domestic currency and the nation's most important trade partners. It takes into account the importance of each trading partner in the nation's overall trade and hence provides a more accurate measure of the competitiveness of the nation's exports. Choices B, C, and D are not accurate definitions of this term.

A Weighted Average of the Exchange Rates Between the Domestic