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JAMB Economics 1981 Question 43

Question 43

Balance of Payments and Exchange Rates

When a nation's exports are greater than its imports

  1. A.the net foreign trade is zero
  2. B.an unfavourable balance of payments exists
  3. C.a favourable balance of payments exists
  4. D.an unfavourable balance of trade exists
  5. E.a favourable balance of trade exists.
Show the answer and explanation

Answer: E (a favourable balance of trade exists.)

Explanation

When exports of goods are worth more than imports, the balance of trade is favourable (a surplus).