Option 1 -> Commercial banks facilitate currency transactions but do not link currencies for comparison.
Option 2 -> Foreign Exchange Rate directly links currencies and enables price comparison across countries.
Option 3 -> Foreign Exchange Market is the platform for trading currencies, not the linking mechanism itself.
Option 4 -> Monetary authorities regulate monetary policy but don't directly link currencies for comparison.
Hence, Foreign Exchange Rate -> The foreign exchange rate is the price of one currency expressed in terms of another currency. It acts as a conversion factor that links different currencies together, making it possible to compare costs, prices, and economic values across countries. For example, if 1 USD = 80 INR, we can easily compare the price of goods in the US with those in India. Without exchange rates, international price comparisons would be impossible. -> correct