What is the exchange rate that compares present market values between two countries?

The exchange rate that compares present market values between two countries is the nominal exchange rate. This rate reflects the current market value of one currency in terms of another without adjusting for price level differences between the two countries. Essentially, it tells you how much of one currency you need to spend to acquire a certain amount of another currency based on current trading conditions.

In contrast, the real exchange rate adjusts the nominal exchange rate to account for differences in price levels between the two countries, providing a more accurate representation of purchasing power. Fixed exchange rates are those that a government or central bank sets and maintains as constant relative to another currency, while inflation refers to the overall increase in prices and does not directly measure currency exchange rates. Understanding these distinctions clarifies why the nominal exchange rate is the correct answer for comparing present market values between two countries.