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JAMB Commerce 2000 Question 29

Question 29

Foreign Trade

A shortcoming of the Second-tier Foreign Exchange Market in Nigeria is that it

  1. A.serves as a mechanism for evaluating an unrealistic exchange rate for the naira
  2. B.creates unhealthy competition amongst users of foreign exchange
  3. C.contributes to destabilizing national resource allocation
  4. D.contributes to flooding the market with foreign essential commodities.
Show the answer and explanation

Answer: B (creates unhealthy competition amongst users of foreign exchange)

Explanation

Under SFEM users bid against each other for scarce foreign exchange, which created unhealthy competition.