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JAMB Economics 2013 Question 45

Question 45

International Trade

A measure for preventing the external value of the naira from falling is for the government to

  1. A.increase its spending with foreign reserve.
  2. B.sell its own currency.
  3. C.reduce interest rate.
  4. D.buy its own currency with foreign reserve.
Show the answer and explanation

Answer: D (buy its own currency with foreign reserve.)

Explanation

Buying naira with foreign reserves raises the demand for naira, which supports its value.