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JAMB Economics 1997 Question 48

Question 48

Balance of Payments and Exchange Rates

In recent years, Nigeria's balance of payments has continued to register a deficit due to I: increased government overseas' spending II. increasing prices of exports III. rising import prices IV. more payments to overseas' investors.

  1. A.I, II and III
  2. B.I, II and IV
  3. C.I, III and IV
  4. D.II, III and IV.
Show the answer and explanation

Answer: C (I, III and IV)

Explanation

Overseas spending, dearer imports and payments to foreign investors all send money out. Rising export prices bring money in, so II does not cause a deficit.