When an economy is having a balance of payment surplus the best alternative opened to it is to

Source: JAMB · 2024

When an economy is having a balance of payment surplus the best alternative opened to it is to

  1. borrow from abroad
  2. devalue its currency
  3. increase its foreign reserve ✓
  4. promote imports into the country
Explanation

A surplus means the country earns more foreign currency than it spends. This extra money can add to foreign reserves.

Borrowing is for deficits, not surpluses. Devaluation helps exports but is not needed when already in surplus.

Building foreign reserves creates a safety net for future economic challenges.

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