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Assume that the Argentine central​ bank's assets consist of 100 percent of​ interest-bearing U.S. Treasury bonds....

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Economics

Assume that the Argentine central​ bank's assets consist of 100 percent of​ interest-bearing U.S. Treasury bonds. If Argentina gave up its peso and dollarized its economy​ completely, what and how much does it​ sacrifice? ​(​Hint: Think through the actual steps Argentina should have to take to dollarize its economy​.) Part 2 A. The Argentine central bank loses completely its power to control the money supply. B. Since Argentina already operates a currency board holding U.S. bonds as its​ assets, dollarization would not impose any further cost. C. There is no real loss. Argentina can trade the U.S. bonds it holds for dollars to use as currency and any expansion of of the money supply can be obtained by sending real​ goods, services, or assets to the U.S. for​ dollars, which can cahed in for goods and services from the U.S. whenever it wants. D. Argentina loses interest by holding​ non-interest bearing dollar bills instead of​ interst-earning U.S. treasury bills.

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