Question

What is the different real exchange rate and nominal exchange rate?

Answer 1

Nominal Exchange Rates versus Real Exchange Rates. ... While the nominal exchange rate tells how much foreigncurrency can be exchanged for a unit of domestic currency, the real exchange rate tells how much the goods and services in the domestic country can be exchanged for the goods and services in a foreign country.

Answer 2

While the nominal exchange rate tells how much foreign currency can be exchanged for a unit of domestic currency, the real exchange rate tells how much the goods and services in the domestic country can be exchanged for the goods and services in a foreign country.