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Difficulty: Very hardLiteral Comprehension and Fact Retrieval

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

In 1912, the British colonial administration established the West African Currency Board (WACB) to oversee the issuance and management of a unified currency across Nigeria, the Gold Coast, Sierra Leone, and the Gambia. Prior to its inception, trade relied heavily on silver coins and traditional mediums of exchange like cowries and brass rods. Headquartered in London rather than West Africa, the Board did not function as a commercial or central bank; it held no discretionary monetary policy powers. Instead, its primary mandate was to maintain a strict one-to-one convertibility between the West African pound and the British pound sterling, backing every local note issued with equivalent reserves held in London.

According to the passage, what was the principal function of the West African Currency Board upon its creation?

  1. A
    Operating as a central banking institution with full authority over regional monetary policy.
  2. Maintaining a direct, equal conversion rate between the West African pound and British currency.Answer
  3. C
    Establishing local bank branches across the four West African territories to phase out traditional trade goods.
  4. D
    Replacing silver coinage with brass rods and cowries to standardize regional transactions.

Answer

The principal function of the West African Currency Board was to maintain a strict one-to-one convertibility between the West African pound and the British pound sterling.
The passage explicitly states that the primary mandate of the West African Currency Board was 'to maintain a strict one-to-one convertibility between the West African pound and the British pound sterling.' This directly aligns with maintaining a direct, equal conversion rate between the two currencies.

Step-by-Step Solution

1
Locate key terminology in the question stem
Identify 'principal function' or primary mandate of the West African Currency Board in the text.
Literal comprehension requires matching the question's focus directly to explicitly stated facts in the text.
2
Scan the passage for explicit statements defining the Board's mandate
Found text: 'Instead, its primary mandate was to maintain a strict one-to-one convertibility between the West African pound and the British pound sterling...'
This explicitly outlines the primary purpose for which the Board was created.
3
Evaluate options against explicit evidence and eliminate contradictions
The option describing equal conversion rate alignment directly paraphrases the explicit passage fact, while alternative choices contradict stated facts or make unmentioned claims.
Only facts directly corroborated by the text represent valid literal comprehension answers.

Key Concept

Literal Fact Retrieval
Estimated Time:1m 30s
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Topics

Literal Comprehension and Fact Retrieval

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