Waec Model Questions Vol1 2021 Government Question 3

Nigeria currently imposes a uniform import tariff of 15% on all goods from Country X. In the previous fiscal year, Nigeria imported goods worth ₦4.2 billion from Country X and exported goods worth ₦1.5 billion to Country X. The government is considering a bilateral agreement that would reduce the tariff on imports from Country X to 5% and introduce an export subsidy of 8% on goods exported to Country X (calculated on the export value before subsidy). Assuming trade volumes remain unchanged, calculate the net change in Nigeria's trade revenue (tariff revenue minus subsidy outlay) resulting from the agreement. State whether the government's revenue will increase or decrease, and by how much (in billions of naira, rounded to two decimal places).