Answer: Adopts the currency of another nation as its medium of exchange and unit of account.

**Explanation:** - **Option A** is correct because dollarization involves a country adopting another nation's currency as its medium of exchange and unit of account, relinquishing control over its monetary policy. - **Option B** describes a monetary union, not dollarization. In a monetary union, member countries share the same legal tender, but dollarization specifically refers to the unilateral adoption of another country's currency. - **Option C** refers to a currency board arrangement, where a country commits to exchanging domestic currency for a specified foreign currency at a fixed rate. This is distinct from dollarization, which involves full adoption of the foreign currency without such a commitment. This question tests the candidate's understanding of exchange rate regimes and their implications for international trade and capital flows.

Author: LeetQuiz Editorial Team