Seigniorage refers to the profit gained by a government through the difference between the face value of issued currency and the cost of producing it. In other words, it is the revenue earned through the process of creating and issuing money. Therefore, option B is the correct answer.

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Seigniorage Is

Question 65

Multiple Choice

Seigniorage is

A) when a country abandons its currency altogether and adopts that of another country.
B) when a country loses the revenue that it received by issuing money.
C) when the par exchange rate is reset at a lower level.
D) when the domestic currency is backed 100% by a foreign currency.

Correct Answer: