Neco 2018 Economics Question 12

Practice objective / multiple choice question 12 from the 2018 Neco Economics examination.

Neco 2018 Economics Objective / Multiple Choice Hard Difficulty
Question 12 NECO • 2018 • ECONOMICS • objective

Country X imports 2 000 tonnes of wheat at a world price of $0.50 per kg and exports 1 500 tonnes of cocoa at $2.00 per kg. The exchange rate is 360 Naira per US dollar. The government imposes a 5 % tariff on wheat imports, a 10 % export tax on cocoa, and grants a subsidy of $0.05 per kg to wheat producers. (i) Calculate the net trade balance in Naira after the tariff, tax and subsidy. (ii) Express the percentage change in the trade balance relative to the situation with no tariff, tax or subsidy.

Answer Options

A. (i) Net trade surplus = ₦540 000 000. (ii) Trade balance falls by 10 % relative to the no‑policy case.
B. (i) Net trade deficit = ₦150 000 000. (ii) Trade balance falls by 15 % relative to the no‑policy case.
C. (i) Net trade surplus = ₦720 000 000. (ii) Trade balance rises by 5 % relative to the no‑policy case.
Correct Answer D. (i) Net trade surplus = ₦630 000 000. (ii) Trade balance falls by 12.5 % relative to the no‑policy case.
Correct Answer
D
Correct Option:
(i) Net trade surplus = ₦630 000 000. (ii) Trade balance falls by 12.5 % relative to the no‑policy case.

About This Question

This is Neco 2018 Economics Question 12. It is one of the objective questions from the 2018 Neco Economics examination.

Difficulty level: Hard .

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