WAEC Economics Past Questions & Answers - Page 73

361.

Which of the following international organizations is concerned with the stabilization of the balance of payments? The

A.

International Monetary Fund (IMF)

B.

World Bank (IBRD)

C.

United Nations Organization (UNO)

D.

Economic Commission for Africa (ECA)

Correct answer is A

Balance of payments policies: The policies include devaluation, demand management, and controls of various types, all of which have frequently featured in International Monetary Fund (IMF) programmes, either in terms of their encouragement or discouragement.

 

362.

When a number of countries agree to remove all trade barriers among themselves and at the same time charge a common tariff against non member countries, it is known as

A.

Free trade area

B.

Common market

C.

Custom union

D.

Economic community

Correct answer is C

customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff. Customs unions are established through trade pacts where the participant countries set up common external trade policy (in some cases they use different import quotas).

 

363.

One of the physical measures that can be used to reduce the volume of imports is the

A.

Reduction of personnel income tax

B.

Removal of imports duties

C.

Use of foreign exchange control

D.

Liberalization of credit for importers

Correct answer is C

Foreign exchange control is the procedure by which a government intervenes in the foreign exchange market, banning or restricting sales and purchases of local currencies by non-residents as well as sales and purchases of foreign currencies by residents. When there is no foreign exchange to engage in international trade, imports will fall.

 

364.

When the international value of a country's currency rises, other things being equal, the country's

A.

Net exports tend to increase

B.

Imports tend to increase

C.

Net exports tend to decrease

D.

Export tend to be stable

Correct answer is A

No explanation has been provided for this answer.

365.

Balance of payment surplus implies that receipts for exports are

A.

At par with payments for imports

B.

Greater than payment for imports

C.

Less than payment for imports

D.

Proportional to payments for imports

Correct answer is B

BALANCE OF PAYMENTS SURPLUS: An imbalance in a nation's balance of payments in which payments made by the country are less than payments received by the country (exports exceeds imports). It's considered favorable because more currency is flowing into the country than is flowing out.