In 2004, Ecuador replaced its currency, the sucre, with the U.S. dollar as its official currency. The hope was that this would end record inflation running at 104 percent a year. This action prevented the government from printing excessive money to meet its budgetary needs.. As long as Ecuador maintains the U.S. dollar as its official currency, what will happen to the monetary policy of Ecuador? A. It will become both more powerful and more flexible. B. It will become more powerful but less flexible. C. It will become less powerful but more flexible ( incorrect) D. It effectively will cease to exist.
In 2004, Ecuador replaced its currency, the sucre, with the U.S. dollar as its official currency. The hope was that this would end record inflation running at 104 percent a year. This action prevented the government from printing excessive money to meet its budgetary needs.. As long as Ecuador maintains the U.S. dollar as its official currency, what will happen to the monetary policy of Ecuador? A. It will become both more powerful and more flexible. B. It will become more powerful but less flexible. C. It will become less powerful but more flexible ( incorrect) D. It effectively will cease to exist.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:In 2004, Ecuador replaced its currency, the sucre,
with the U.S. dollar as its official currency. The
hope was that this would end record inflation
running at 104 percent a year. This action prevented
the government from printing excessive money to
meet its budgetary needs.. As long as Ecuador
maintains the U.S. dollar as its official currency,
what will happen to the monetary policy of
Ecuador?
A. It will become both more powerful and more
flexible.
B. It will become more powerful but less flexible.
C. It will become less powerful but more flexible (
incorrect)
D. It effectively will cease to exist.
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