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JAMB Economics 1994 Question 46

Question 46

Balance of Payments and Exchange Rates

One of the techniques for rectifying a deficit balance of payment is

  1. A.import promotion
  2. B.devaluation
  3. C.physical intervention
  4. D.borrowing from abroad
Show the answer and explanation

Answer: B (devaluation)

Explanation

Devaluation makes exports cheaper and imports dearer, which helps to close a deficit.