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The nominal foreign exchange rate is the value of foreign goods in the domestic currency. the...

The nominal foreign exchange rate is
the value of foreign goods in the domestic currency.
the value of domestic goods in the foreign currency.
the rate at which one currency is traded for another.
the difference between what a good costs in the domestic currency and the foreign currency.

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Answer #1

Answer : Option c) the rate at which one currency is traded for another

The nominal exchange rate basically shows how much of foreign currency you can buy using home currency.

Let's say for example : 1 unit of Foreign Currency (F) = 20 units of Home currency (H)

That is ; 1F = 20H

Then this means than one unit of Foreign currency can be exchanged for 20 units of Home currency or the other way round that is 20 units of Home currency can be exchanged for 1 unit of Foreign currency.

Thus this is the concept of nominal exchange rate.

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