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Example of Nominal Exchange Rate: AUD/USD
To illustrate the nominal exchange rate, consider an example where Australia is the home economy and the United States is the foreign economy. The exchange rate (e) is the number of Australian dollars (AUD) per US dollar (USD). For instance, on August 1, 2024, the rate was . This means 1.54 AUD was needed to buy 1 USD. Consequently, if an Australian business bought equipment from the US for $5,000, the cost in Australian dollars would be calculated as $5,000 \times 1.54 = 7,700$ AUD.
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Example of Nominal Exchange Rate: AUD/USD
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Learn After
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