-In the figure above, item 2 is the ____.
Definitions:
Nominal Exchange Rate
The rate at which one country's currency can be exchanged for another country's currency, not adjusted for inflation.
Real Exchange Rate
The real exchange rate compares the relative price of goods and services between countries, adjusted for differences in price levels.
Nominal Exchange Rate
The rate at which one country's currency can be exchanged for another country's currency.
Real Exchange Rate
An exchange rate that has been adjusted for the relative purchasing power of the two currencies, reflecting the quantity of goods and services one currency can buy in another country.
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