In the Early 2000s, Ecuador Replaced Its Currency, the Sucre

question 59

Multiple Choice

In the early 2000s, Ecuador replaced its currency, the sucre, with the U.S.dollar as its official currency to solve its inflation problem.As long as Ecuador maintains the U.S.dollar as its official currency, what will happen to the monetary policy of Ecuador?

• A)it will become both more powerful and more flexible
• B)it will become more powerful but less flexible
• C)it will become less powerful but more flexible
• D)it effectively will cease to exist

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Definitions:

Trial Balance

An accounting report that lists the balances of all ledgers in two columns, debits and credits, ensuring that total debits equal total credits.

Debit Balances

Accounts with a balance that represents amounts owed or expenses; typically assets and expenses accounts.

Financial Statement Order

The sequence in which financial statements are prepared and presented, typically starting with the income statement, followed by the statement of financial position, and so on.

Financial Ratios

Quantitative measures derived from financial statement analysis to evaluate the financial health of a company.