The nominal exchange rate is the rate at which currency can be exchanged

The nominal exchange rate is the rate at which currency can be exchanged

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The nominal exchange rate is the rate at which currency can be exchanged. If the  nominal exchange rate between the dollar and the lira is 1600, then one dollar will  purchase 1600 lira. Exchange rates are always represented in terms of the amount of  foreign currency that can be purchased for one unit of domestic currency. Thus, we  determine the nominal exchange rate by identifying the amount of foreign currency that  can be purchased for one unit of domestic currency.  The real exchange rate is a bit more complicated than the nominal exchange rate. 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. 
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