Balance of Payments 2

Economics S.S.S 3 Second Term

WEEK 2

Balance of Payments 2

Performance Objectives

Student should be able to:

1. Identify the different ways of dealing with balance of payments disequilibrium.
2. Trace the developments in Nigeria’s balance of payment.

Content

Methods of correcting balance of payment problems

Balance of payments deficit of a country can be corrected by the following measures;

1. Expenditure reduction: This as to do with cutting down domestic demand and reduce imports.

2. Foreign exchange control: This involves the rationing of foreign exchange to reduce the balance of payment deficit.

3. Devaluation: This has the capacity of reducing the cost of exports and makes imports expensive, thus improving the balance of payment

4. Fiscal policy control: This involves…