For Ecuador,the result of adopting the dollar as its official currency is that
A) its government cannot capture revenue (seigniorage) by issuing currency
B) there tends to be greater promise of lower interest rates and greater financial stability
C) the rate of inflation in Ecuador is tied to that of the United States
D) all of the above

Question

Quizplus · Accepted Answer

Adopting the US dollar as official currency eliminates the possibility for the Ecuadorian government to capture revenue from printing its own currency (seigniorage). The adoption also ties the inflation rate to that of the United States, potentially leading to greater financial stability and lower interest rates through increased investor confidence. Therefore, all options (A, B, and C) are true for Ecuador after adopting the US dollar.

For Ecuador,the Result of Adopting the Dollar as Its Official