Neco 2024 Economics Question 11

Practice objective / multiple choice question 11 from the 2024 Neco Economics examination.

Neco 2024 Economics Objective / Multiple Choice Hard Difficulty
Question 11 NECO • 2024 • ECONOMICS • objective

During Year 1 the country exported 2 000 000 tonnes of cocoa at an average price of \$2 500 per tonne and imported 1 500 000 tonnes of wheat at \$300 per tonne. In Year 2 the world price of cocoa fell by \(12\%\) while the country's export volume rose by \(8\%\). At the same time the import‑price index for wheat increased by \(5\%\) and the import volume remained unchanged. \( (a)\) Calculate the percentage change in the terms of trade from Year 1 to Year 2. \( (b)\) Assuming real national income is proportional to export earnings minus import expenditures, determine whether national income increased or decreased and by what percentage.

Answer Options

A. Terms of trade fell by approximately 20.0 % and real national income decreased by about 9.5 %.
B. Terms of trade fell by approximately 12.5 % and real national income decreased by about 4.3 %.
Correct Answer C. Terms of trade fell by approximately 16.2 % and real national income decreased by about 6.0 %.
D. Terms of trade rose by approximately 3.8 % and real national income increased by about 2.1 %.
Correct Answer
C
Correct Option:
Terms of trade fell by approximately 16.2 % and real national income decreased by about 6.0 %.

About This Question

This is Neco 2024 Economics Question 11. It is one of the objective questions from the 2024 Neco Economics examination.

Difficulty level: Hard .

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