A Disadvantage of Dollarization Is That It

question 26

Multiple Choice

A disadvantage of dollarization is that it

• A) prevents a central bank from creating inflation.
• B) avoids the possibility of a speculative attack on the domestic currency.
• C) does not allow a country to pursue its own independent monetary policy.
• D) is a strong commitment to exchange rate stability.

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Definitions:

Cash Receipts

The money received by a business during a given period, including revenues from sales, services, and other receipts.

Raw Material B

Basic materials used in the production process to manufacture goods, referred to here as "Material B."