A country may be able to earn more from exports if she_____________

Analyze the question: The question asks which action can help a country earn more from its exports (foreign exchange earnings).

Concept: Exports earn more when foreign buyers demand more of them. Demand rises when the goods become cheaper in foreign currency terms.

Evaluating the options:

• A. Increase her export duty: An export duty is a tax on exports. It raises the cost of exporting, makes goods more expensive abroad, and discourages exports. This reduces earnings.
• B. Devalues her currency: Devaluation lowers the value of the home currency relative to foreign currencies. Exports then become cheaper for foreigners. For example, if ₦1,000 per unit of a product is worth $2 before devaluation and only$1 after, foreign buyers will buy more. Export volume rises, and export earnings can increase (provided demand is reasonably elastic).
• C. Increases her import duty: This taxes imports and protects local industries. It reduces imports but does not directly raise exports, and trading partners may retaliate.
• D. Allows her currency to appreciate: A stronger currency makes exports more expensive abroad, so demand for them falls. This is the opposite of what is needed.

Exam tip: Remember it this way:

• Devaluation → exports cheaper abroad, imports costlier at home
• Appreciation → exports costlier abroad, imports cheaper at home

When a question asks how to boost exports, look for the option that makes the goods cheaper for foreigners.