Dollarization Occurs When

question 21

Multiple Choice

Dollarization occurs when

• A) the Federal Reserve finances a federal budget deficit by buying newly issued Treasury bonds in order to prevent interest rates from rising
• B) a country adopts the US dollar as its legal tender
• C) foreign currency boards target the US dollar
• D) US importers reprice items in dollar terms
• E) The IMF or a central bank sells reserves of US dollars on the world market to alter exchange rates

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Definitions:

Variable Expenses

Costs that fluctuate in direct proportion to changes in the level of activity or business operations, such as materials and labor.

Fixed Expenses

Costs that do not change with the level of production or sales activity, such as rent, salaries, and insurance.

Financial Advantage

An economic benefit or superiority that a person or entity holds, giving them a better position in financial transactions or comparisons.

Fixed Expenses

Expenses that remain constant regardless of the volume of goods produced or sold within a specific time frame, like lease payments or wage bills.