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Article Summary Cuba Has Announced Its Intentions to End Its Dual Currency

question 56

Multiple Choice

Article Summary
Cuba has announced its intentions to end its dual currency system which has been in place since 1994. Presently, Cuba has two official currencies, the national peso (CUP) and the convertible peso (CUC) . The national peso is the currency used by most businesses and citizens, and the convertible peso was designed to be used primarily in the tourism industry and for foreign trade. The coveted convertible peso is pegged to the U.S. dollar and is worth 25 times the national peso, despite the government treating them as having equal value in official accounts, trading on a one-for-one basis for official state entities. Few Cubans other than those with government ties have access to convertible pesos, which allows them to enjoy a much improved lifestyle due to the currency's relative value. One exception is people working in the tourist-centered hospitality industries, such as waiters and hotel staff, who receive convertible pesos as tips, often earning them more than medical and legal professionals who are paid in national pesos. The currency unification is expected to be a gradual process, taking up to 18 months, and could involve both a devaluing of the convertible peso and a revaluing of the national peso.
Source: Hannah Strange, "Cuba to end dual currency as part of Castro's economic reforms," Telegraph, October 22, 2013.

-Refer to the Article Summary.The convertible peso (CUC) ,which is pegged to the U.S.dollar,is worth 25 times the national peso,yet Cuban officials treat the convertible peso and the national peso as being of equal value.This indicates that the national peso is ________ compared to the convertible peso,and would need to be ________ to for the two currencies have equal value in the marketplace.

Definitions:

Bankruptcy

A legal proceeding involving a person or business that is unable to repay their outstanding debts, leading to the assets being allocated to creditors.

Indirect Costs

Expenses that are not directly attributable to a specific product or activity but are necessary for the business's operation, such as utilities or administrative salaries.

Financial Distress

A scenario in which a corporation is unable to fulfill or struggles with settling its debts to those it owes money.

Earnings Per Share

A financial ratio indicating the amount of profit attributed to each outstanding share of a company's common stock, calculated as net income divided by the number of shares.