What Is Dollarization

question 156

Multiple Choice

What is dollarization?

• A) a price reduction strategy where everything within a country is sold at a rounded dollar amount
• B) the complete elimination of U.S. currency from a nation's economy
• C) making the denominations of local currency identical to those in U.S. currency
• D) the process by which a country in whole or in part adopts the U.S. dollar as its official currency
• E) the practice of a country's using the U.S. banking system for its transactions

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time for an investment.

Internal Rate of Return

Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments, representing the discount rate at which the net present value of costs (cash outflows) and benefits (cash inflows) of an investment equal zero.

Net Working Capital

A financial metric that represents the difference between a company's current assets and current liabilities.

Cash Flows

The total amount of money being transferred into and out of a business, affecting the company's liquidity, solvency, and overall financial health.