Neco 2022 Commerce Question 4

Practice essay / theory question 4 from the 2022 Neco Commerce examination. This question covers Foreign Trade, Terms of trade, Current account, Tariffs and policy impact .

Neco 2022 Commerce Essay / Theory
Topics: Foreign Trade Terms of trade Current account Tariffs and policy impact
Question 4 NECO • 2022 • COMMERCE • essay

Nigeria imports wheat flour and exports cocoa beans. The data for the 2022 fiscal year are as follows:\n\n- Export value of cocoa beans: \u20a91.2 billion; quantity exported: 150,000 tonnes; world price per tonne: \u20a98,000.\n- Import value of wheat flour: \u20a9900 million; quantity imported: 120,000 tonnes; world price per tonne: \u20a97,500.\n- The exchange rate moved from \u20a9410 per US$ at the start of the year to \u20a9460 per US$ at the end of the year.\n- The government imposes a 5 % ad valorem tariff on wheat flour imports.

Question Parts

( a )
Calculate the terms of trade ratio for the year using the given world prices.
( b )
Determine the current account balance for the year, ignoring other items.
( c )
If the 5 % tariff is applied to wheat flour imports, calculate the new effective import cost in Naira and the revised current account balance.
( d )
Discuss two possible macro‑economic effects of a deteriorating terms of trade for Nigeria.

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About This Question

This is Neco 2022 Commerce Question 4. It is one of the essay questions from the 2022 Neco Commerce examination.

The question covers Foreign Trade, Terms of trade, Current account, Tariffs and policy impact .

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