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WAEC Economics 2021 Question 44

Question 44

Balance of Payments and Exchange Rates

If a country's import bill is high, she can encourage exports by

  1. A.allowing her currency to depreciate.
  2. B.allowing her currency to appreciate.
  3. C.liberalizing importation.
  4. D.increasing taxes on all locally produced goods.
Show the answer and explanation

Answer: A (allowing her currency to depreciate.)

Explanation

A cheaper currency makes exports cheaper abroad.