Dollarization Is a Policy Action That

question 7

Multiple Choice

Dollarization is a policy action that

• A) tries to stabilize the value of the local currency vs. the U.S. dollar.
• B) adopts the currency of another country as the national medium of exchange.
• C) mimics policy actions taken by the Bank of Canada.
• D) outlaws the holding of foreign currencies other than the U.S. dollar.
• E) buys and sells foreign exchange reserves in the foreign exchange market.

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Definitions:

¥ Per A$

The exchange rate showing how much Japanese yen (¥) one Australian dollar (A$) can buy.

Exchange Rate

An exchange rate determines how much one currency is worth in terms of another, playing a critical role in international trade and investment.

¥1.00

The monetary value of one Japanese yen, the official currency of Japan.

A$

The symbol for the Australian Dollar, the official currency of Australia.