What are the main costs to a country that adopts dollarization?
What will be an ideal response?
There are three main costs. First, there is the lost revenue from seignorage, printing currency only costs a few cents but a large denominated bill can be used to purchase real goods and services making the printing of currency a profitable undertaking. Second, a country that adopts dollarization effectively limits the ability of the central bank to serve as being a lender of last resort since the central bank cannot issue currency. Thirdly, there is the loss of domestic monetary or exchange rate policy. This is probably the smallest cost since it is the lack of confidence in monetary authorities that usually leads to dollarization.
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A) the money price of oil; decreases B) the money wage rate; decreases C) the money wage rate; increases D) technology; decreases E) technology; increases
A single-price monopoly has a marginal revenue curve that is
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a. True b. False Indicate whether the statement is true or false