Question

Suppose that Cambodia becomes the next popular tourist destination. You notice that hotels, restaurants, and other services cost much less there than in the United States. If the exchange rate is defined as number of riels per dollar, the real exchange rate is:________.

a) 0.
b) 1.
c) greater than 1.
d) less than 1.

Answer 1

c) greater than 1.

Step-by-step explanation:

Cambodia is a southeast country in Asia. It is a beautiful country. It is very famous for the largest Hindu temple in the world, the Angkor Wat.

The real exchange rate or RER in finance is defined as the currency of one country will be exchange for the currency of another country. It is the value of the currency of one country in comparison to the other country's currency.

In the context, the real exchange rate of Cambodian riel will be greater than 1 as the value Cambodian riel is much lower than U.S. dollar.