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Question

Difficulty: MediumLiteral Comprehension and Fact Retrieval

Read the passage below carefully and answer the question that follows:

The West African Currency Board (WACB) was constituted in London in November 1912 following the recommendations of the Emmott Committee. The board was mandated to issue a shared, stable currency for British West African territories, including Nigeria, the Gold Coast, Sierra Leone, and the Gambia. Prior to its establishment, silver coins and various local items, such as cowries and brass rods, served as the primary media of exchange. The WACB introduced new currency notes in 1916, which were fully backed by sterling reserves held in London. Operationally, the board maintained a fixed exchange rate between the West African pound and the British pound sterling. Although it successfully stabilized the regional monetary system, the WACB was eventually dissolved in the late 1950s and 1960s as individual West African nations gained political independence and founded their own central banks to manage monetary policy autonomously.

According to the passage, what backed the currency notes issued by the West African Currency Board in 1916?

  1. Sterling reserves held in LondonAnswer
  2. B
    Local supplies of cowries, brass rods, and silver coins
  3. C
    Gold deposits managed by independent regional central banks
  4. D
    Fixed exchange profits accumulated from member territories

Answer

The currency notes issued in 1916 were backed by sterling reserves held in London.
The text directly states that the paper currency introduced in 1916 was fully supported by sterling reserves kept in London.

Step-by-Step Solution

1
Locate the explicit statement regarding the 1916 currency notes in the reading passage.
The text explicitly states: 'The WACB introduced new currency notes in 1916, which were fully backed by sterling reserves held in London.'
Literal fact retrieval requires finding direct textual evidence that answers the specific prompt.
2
Match the extracted fact with the corresponding option.
The choice mentioning sterling reserves held in London directly reflects the explicit wording of the passage.
Correct literal comprehension options must be directly corroborated by the text without extrapolation.

Key Concept

Literal Fact Retrieval
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Topics

Literal Comprehension and Fact Retrieval

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