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What are some benefits of polarization?
The general advantages of polarization are clear. They are the standard economic benefits of financial and monetary integration: reduced transactions costs, reflecting an enhanced usefulness of money for all its basic functions (medium of exchange, unit of account, store of value).
What are some possible problems with polarization?
The other important reasons include the public's low trust in the monetary policy, high inflation and devaluation expectations, and the remembrance of recent high inflation and/or devaluation. In our opinion, the main causes of the high level of polarization in the economy are as follows.
What is polarization and why is it important to developing countries?
The main reason for polarization is to receive the benefits of greater stability in the value of a foreign currency over a country's domestic currency. The downside of polarization is that the country gives up its ability to influence its own monetary policy by adjusting its money supply.
What is full polarization?
Full polarization means taking the next step, from informal, limited polarization to full, official use of the foreign currency in all transactions. The main attraction of full polarization is the elimination of the risk of a sudden, sharp devaluation of the country's exchange rate.
What does it mean to dollarize a currency Chegg?
1) The answer is D- A Dollarize currency means a foreign country uses the U.S. dollar as its currency.
What is dollarization in Zimbabwe?
DE fact dollarization, also known as unofficial dollarization, arises when individuals lose confidence in a domestic currency and hold foreign currency bank deposits or notes to protect against high inflation in that domestic currency as is the case in Zimbabwe at present.
What is polarization of economy?
The main reason for polarization is to receive the benefits of greater stability in the value of a foreign currency over a country's domestic currency. The downside of polarization is that the country gives up its ability to influence its own monetary policy by adjusting its money supply.
How does polarization work?
This is known as full polarization. The extreme method of pegging lies in a currency board, by which countries “anchor” their local currencies to a convertible currency (often the U.S. dollar). ... The result is that the local currency has the same value and stability as the foreign currency.
What is the currency in our country is to achieve legal recognition?
In the United States, the dollar is the primary form of currency, backed by the full faith and credit of the government and the Federal Reserve.
What country has no currency?
All nations use currency of some kind, but there are many nations which do not issue currency of their own. Ecuador, East Timor, El Salvador, the Marshall Islands, Micronesia, Paley, Turks and Pieces, and the British Virgin Islands all use the U.S. dollar.
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