The Difference Between the Nominal and Real Exchange Rates Is

question 242

Multiple Choice

The difference between the nominal and real exchange rates is that:

• A) nominal rates are temporary,while real rates are permanent.
• B) the real exchange rate is the actual rate used by traders.
• C) the real rate takes relative purchasing power into account,while the nominal rate doesn't.
• D) the nominal rate is approximate,while the real rate is precise.

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Definitions:

Average Tax Rate

The proportion of total income that is paid as tax, calculated by dividing the total tax paid by the taxpayer's total income.

Average Tax Rate

The proportion of total income paid as taxes, calculated by dividing the total amount of taxes paid by the taxpayer's total income.

Interest Income

Revenue earned from deposit accounts or investments that pay interest, such as savings accounts, bonds, or interest-bearing loans.

Eligible Dividends

Dividends that qualify for a reduced tax rate on dividend income in certain jurisdictions.