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JAMB Economics 1982 Question 50

Question 50

Balance of Payments and Exchange Rates

In Nigeria, a balance of payments deficit can be solved by all of the following EXCEPT

  1. A.imposing import bans on some commodities
  2. B.imposing import duties
  3. C.drawing down on external reserves
  4. D.purchasing foreign exchange from foreign countries
  5. E.devaluation of the currency.
Show the answer and explanation

Answer: D (purchasing foreign exchange from foreign countries)

Explanation

Buying foreign exchange from abroad needs payment in other foreign currency, so it does not remove a deficit; the others cut imports, raise exports or finance the gap from reserves.