The policy by which government encourages producers of export goods to produce and export more in order to earn more foreign exchange is called__________

1. Analyze the question The question asks for the name of a government policy that encourages producers to make and sell more goods abroad so the country earns more foreign exchange.

2. Explain the concept Governments use several measures to push exports. These include tax holidays, export subsidies, export credit guarantees, and export processing zones. In Nigeria, examples are the Export Expansion Grant and the Nigerian Export Promotion Council (NEPC). Together, these measures are called export promotion.

3. Check each option

• A. Sales promotion: This is a firm's marketing strategy, such as discounts and advertising. It is not a government trade policy.
• B. Terms of trade: This is the ratio of a country's export prices to its import prices. It measures the gain from trade and is not a policy.
• C. Export promotion: This is the government policy of encouraging and supporting producers to produce and export more, which earns foreign exchange. It matches the question exactly.
• D. International trade: This is the general exchange of goods and services between countries. It is not a specific policy.

4. Answer The correct option is C. Export promotion.

5. Exam tip Match the key words in the question to the answer. "Government encourages producers to export more" points to export promotion. Likewise, "government restricts imports to protect local industries" points to import substitution or protectionism. Do not confuse "terms of trade" (a ratio) with a policy.