passwella.
Menu

JAMB Economics 2004 Question 32

Question 32

Money and Inflation

One of the causes of the present high rate of inflation in Nigeria is

  1. A.increasing budget surplus
  2. B.increasing factor costs
  3. C.exchange rate appreciation
  4. D.high capacity utilization
Show the answer and explanation

Answer: B (increasing factor costs)

Explanation

Rising costs of inputs such as labour, fuel and imported materials push up prices (cost-push inflation). An appreciating currency would make imports cheaper and reduce inflation.