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.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 46P: Imagine that the economy of Germany finds itself in the following situation: the government budget...

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