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WAEC Economics 2004 Question 45

Question 45

Balance of Payments and Exchange Rates

Surplus in the balance of payments should be used to

  1. A.subsidize multinational companies
  2. B.build infrastructure for friendly nations
  3. C.make donation to developed countries
  4. D.buy investments overseas
Show the answer and explanation

Answer: D (buy investments overseas)

Explanation

A surplus can be invested abroad (or added to reserves) to earn future income.