Neco Model Questions Vol1 2025 Economics Question 34

Practice objective / multiple choice question 34 from the 2025 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2025 Economics Objective / Multiple Choice Hard Difficulty
Question 34 NECO_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • objective

A country exports coffee and cocoa and imports wheat. Coffee accounts for 60\% of export earnings and cocoa for 40\%. During a year the coffee export price index rises by 15\% while the cocoa export price index falls by 5\%. The wheat import price index rises by 12\%. (a) Compute the overall percentage change in the export price index, (b) determine the percentage change in the terms of trade (TOT), and (c) if the initial export and import values were both \(\text{₦}1{,}000\) million and the trade balance showed a surplus of \(\text{₦}200\) million, find the new trade balance after the price changes.

Answer Options

Correct Answer A. TOT falls by about 4.5%; new trade balance shows a deficit of ₦50 million
B. TOT falls by about 7.8%; new trade balance shows a deficit of ₦120 million
C. TOT falls by about 4.5%; new trade balance shows a surplus of ₦30 million
D. TOT rises by about 2.3%; new trade balance shows a surplus of ₦150 million
Correct Answer
A
Correct Option:
TOT falls by about 4.5%; new trade balance shows a deficit of ₦50 million

About This Question

This is Neco Model Questions Vol1 2025 Economics Question 34. It is one of the objective questions from the 2025 Neco Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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