Which of the Following Is NOT an Argument Against Dollarization

question 1

Multiple Choice

Which of the following is NOT an argument against dollarization?

• A) Dollarization causes a loss of sovereignty over domestic monetary policy.
• B) Dollarization removes currency volatility against the dollar.
• C) Dollarization causes the country to lose the power of seignorage.
• D) The central bank of the dollarized country loses the role of lender of last resort.

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Definitions:

Brand-Attached

The emotional connection consumers develop with a specific brand, strongly influencing their purchasing decisions.

Economies of Scale

The price benefits that firms receive by virtue of their size of operations, with each unit's production cost declining as the scale of operations expands.

Economic Inefficiency

Situations where resources are not optimally allocated, resulting in lost potential output or welfare.

Price Wars

A competitive exchange among rival companies where each company lowers the price of its products in an attempt to undercut the competition, potentially harming profit margins.