What is the rate of exchange or exchange rate ?
Correct answer: C. Ratio at which unit of one country's currency is exchanged for unit of another country currency
- A. Power to buy foreign currency
- B. Foreign currency holding
- C. Ratio at which unit of one country's currency is exchanged for unit of another country currency
- D. None of them
Explanation
The exchange rate expresses the ratio at which one nation’s currency can be exchanged for another nation’s currency. It is therefore a relative price between two currencies, not merely a holding or purchasing power.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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