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WAEC Economics 2021 Question 42

Question 42

Balance of Payments and Exchange Rates

A measure that can be adopted to correct a country's balance of payments deficit is to

  1. A.allow the currency to appreciate to encourage imports.
  2. B.allow the currency to depreciate to encourage imports
  3. C.adopt import substitution strategy
  4. D.restrict trade with all countries.
Show the answer and explanation

Answer: C (adopt import substitution strategy)

Explanation

Producing formerly imported goods at home cuts imports.