WAEC Economics 2015 Objective — Question 43

Question 43 of 50 from the West African Examinations Council (WAEC) Economics 2015 Objective paper, with the correct answer and a full explanation.

When the demand for foreign exchange exceeds its supply, the value of the domestic currency

A. appreciates
B. depreciatesCorrect
C. remains unchanged
D. expands

Explanation

Excess demand for foreign currency (relative to supply) means more domestic currency is needed to buy foreign currency, so the domestic currency loses value (depreciates).

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