Explanation should include that rate (used for the Navy and the Coast [enlisted personnel have rates and commissioned officers have ranks] Guard) or rank (used for all other branches)

is a designation to determine level of authority
is to be rendered appropriate respect/courtesy and distinction
is displayed on the uniform and elsewhere.

Explanation should include that grade

is a term used for determining pay categories across all branches of the uniformed services of the United States to govern wages, benefits, and entitlements based on the corresponding military rank
is indicated by the numeral (1–9 with 9 being the highest rate of pay) after the rank/rate of E (enlisted personnel), W (warrant officers), or O (commissioned officers).

For example, the lowest enlisted personnel is E-1, enlisted at the base rate of pay, and would be labeled as such across every U.S. military branch.

Process/Skill Questions

What is the function of pay grades?
How do the levels of military ranks/rates differ? Explain.