The foreign exchange rate
A) is the price of one good or service as compared to a similar good or service.
B) is the same as the price of a product in U.S. dollars.
C) is not relevant when comparing the GDPs of various countries.
D) is the price of one currency in terms of another.

Question

Quizplus · Accepted Answer

The foreign exchange rate is the price of one currency in terms of another. It is the rate at which one currency can be exchanged for another. Option A is referring to a comparative price between two goods/services, not currencies. Option B is incorrect as the foreign exchange rate pertains to the exchange rate between two different currencies, not the price of a product in USD. Option C is incorrect because foreign exchange rates are relevant in comparing the GDPs of various countries as it affects their international trade and economic conditions.

The Foreign Exchange Rate