The real and nominal exchange rates differ in the sense that:
A)The real exchange rate does not express differences in the purchasing power of a currency
B)The nominal exchange rate is adjusted for price differences between countries and the real is not
C)The nominal exchange rate does not reflect differences in purchasing power between currencies
D)Nominal exchange rates are fixed but real rates are flexible

Question

Quizplus · Accepted Answer

The nominal exchange rate is the rate at which one currency can be exchanged for another without considering differences in purchasing power, while the real exchange rate adjusts for price level differences between countries.

The Real and Nominal Exchange Rates Differ in the Sense