Waec Model Questions Vol1 2019 Commerce Question 2

Practice essay / theory question 2 from the 2019 Waec Model Questions Vol1 Commerce examination. This question covers Balance of payments, Trade tariffs and rebates, Foreign exchange calculations, Macroeconomic implications of trade .

Waec Model Questions Vol1 2019 Commerce Essay / Theory
Topics: Balance of payments Trade tariffs and rebates Foreign exchange calculations Macroeconomic implications of trade
Question 2 WAEC_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • essay

A Nigerian trading company imports electronic gadgets and exports agricultural products. The following data relate to its foreign trade for the year 2022: - Total imports: $12 million - Total exports: $8 million - Average exchange rate during the year: 1 USD = ₦460 - The government imposes a 10 % tariff on imported gadgets valued at $5 million of the total imports. - The company receives a 5 % export rebate on its agricultural exports valued at $3 million of the total exports. Assume all other imports and exports are untaxed and unreimbursed.

Question Parts

( a )
Calculate the trade balance in naira before accounting for the tariff and the export rebate.
( b )
Determine the net effect of the tariff and the export rebate on the company's foreign‑exchange earnings in naira.
( c )
If the exchange rate at the end of the year rises to 1 USD = ₦480, calculate the difference in naira that the company would have realized on its net foreign trade (exports minus imports) compared with using the average rate of ₦460.
( d )
Discuss two possible macro‑economic implications for Nigeria if many firms experience similar net foreign‑exchange outcomes as in parts (b) and (c).

Detailed Solution & Marking Scheme

Get the step-by-step solution, key points required by examiners and detailed marking guidance through the Edcrib AI Tutor.

Reveal Answer

About This Question

This is Waec Model Questions Vol1 2019 Commerce Question 2. It is one of the essay questions from the 2019 Waec Model Questions Vol1 Commerce examination.

The question covers Balance of payments, Trade tariffs and rebates, Foreign exchange calculations, Macroeconomic implications of trade .

View More Waec Model Questions Vol1 2019 Commerce Questions More Waec Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support