Neco 2019 Economics Question 5

Nigeria exports 0.8 million tonnes of cocoa and imports 0.5 million tonnes of wheat. In 2019 the export price index (EPI) for cocoa was 120 (base 2010 = 100) and the import price index (IPI) for wheat was 150. The government imposes a 10 % ad‑valorem export tax on cocoa and a 15 % tariff on wheat imports. Assuming world prices stay unchanged, (a) compute the net export and net import price indices after the taxes, (b) calculate the new terms‑of‑trade ratio (net EPI ÷ net IPI), (c) determine the percentage change in real national income approximated by \(Y = (\text{EPI}_{net}\times Q_{exp}) - (\text{IPI}_{net}\times Q_{imp})\), and (d) if the initial exchange rate is 1 USD = 360 Naira, find the new exchange rate that would keep real national income unchanged after the taxes.