Which of the Following Statements Best Describes the Goal of a Currency

question 7

Multiple Choice

Which of the following statements best describes the goal of a currency board and the greatest weakness of this system?

• A)A currency board can instill confidence in a currency but may be useless if the anchor currency becomes devalued.
• B)A currency board can help central banks to address local problems with monetary policy, but there is no way to make sure they do.
• C)A currency board can ensure at least a moderate amount of stability in an economy but leaves central banks with no way to address local problems with monetary policy.
• D)A currency board can instill confidence in a currency, as all local currency is backed up by another currency, but there is no real way to enforce this.

---

Definitions:

Budgeted Sales

An estimate of the sales in units or revenue that a company plans to achieve during a specific period.

Cash Disbursements

The process of paying out money from a fund or account, usually for business-related expenses or transactions.

Manufacturing Overhead Budget

A detailed plan that outlines the expected costs other than direct materials and direct labor that will be incurred in the manufacturing process within a specific period.

Fixed Manufacturing Overhead

The consistent, recurring costs associated with manufacturing that do not change with the level of production, such as rent, insurance, and salaries for management.