A government may cause a favourable change in her invisible trade account by

Step 1: Analyze the question The question asks which action would improve the invisible trade account, so we first need to be clear about what "invisible trade" means.

Step 2: The concept

• Visible trade is the export and import of tangible goods such as cocoa, crude oil and cars.
• Invisible trade is the export and import of services and other non-physical items. Examples are tourism, banking, insurance, shipping, transport, remittances, and education and medical services.
• A favourable invisible trade balance means the country earns more from selling services to foreigners than it spends buying services from abroad.

Step 3: Evaluate each option

• A. Developing tourism and other services: Foreign tourists spending money in Nigeria earns foreign exchange. Better banking, insurance and shipping services also bring in income from abroad. This increases invisible exports, so it is favourable. ✔
• B. Imposing high tariffs on exports: This is a tax on goods, so it concerns visible trade. It would also tend to discourage exports, so it is not favourable.
• C. Encouraging people to go for medical treatment abroad: This means Nigerians spend foreign exchange on foreign services, which is an invisible import. It worsens the account.
• D. Increasing the export of primary products: Primary products are tangible goods, so this improves the visible trade account, not the invisible one.

Step 4: Answer Only option A increases earnings from services, so it is the correct answer.

Exam tip: Ask yourself, "Can I touch it?" If you can (cocoa, oil, cars), it is visible. If it is a service (tourism, banking, insurance, shipping, medical care), it is invisible. Also remember that services you sell to foreigners improve the account, while services you buy from abroad worsen it.