An Arrangement by Which a Central Bank Holds Enough Foreign

question 128

Multiple Choice

An arrangement by which a central bank holds enough foreign currency to back each unit of the domestic currency is called a:

• A) floating exchange rate.
• B) dollarization.
• C) monetization.
• D) currency board.

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Definitions:

Common Shares

Shares of stock representing ownership in a company, giving holders voting rights and a share in the company’s profits through dividends.

Stockholders' Equity

The residual interest in the assets of an entity after deducting liabilities, representing ownership interest held by stockholders.

Noncontrolling Interest

The portion of equity in a subsidiary not owned by the parent company, reflecting the interests of outside investors.

Subsidiary's Net Income

The amount of profit remaining after all expenses, including taxes and operating costs, have been subtracted from total revenue, specific to a company that is controlled by another entity.