35 questions. Try each one, then open the answer to check yourself and read the explanation.
The definition of Economics as 'the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses' was given by
Answer: C (Lionel Robbins)
Lionel Robbins gave this scarcity definition of Economics in 1932.
Which of the following is true of NEPA as a public corporation in Nigeria? It is
Answer: E (a monopoly)
NEPA was the only supplier of electricity in Nigeria, so it was a monopoly.
Which of the following functions of money makes it possible for any person to provide for old age?
Answer: B (Store of value)
Because money can store value, a person can save part of today's income and spend it in old age.
The primary objective of the Agricultural Credit Guarantee Scheme is the provision of
Answer: A (guarantee for loans granted by banks for agricultural purposes)
The scheme guarantees banks' loans to farmers, so banks are more willing to lend to agriculture.
Which of the following is not an advantage of localization of industries?
Answer: D (Growth of conurbation)
Conurbation (towns merging into one crowded urban area) brings congestion and other problems; the other options are benefits of localization.
If the foreign exchange rate is N8 to £1, then a bicycle bought for £40 will cost
Answer: E (N320.00)
£40 × N8 = N320.
All the following are assets of a commercial bank except
Answer: C (bank deposits)
Deposits are money the bank owes its customers, so they are liabilities; cash, bills discounted, investments and advances are assets.
The Central Bank controls commercial banks through all the following measures except
Answer: D (accepting deposits)
Directives, bank rate, open market operations and special deposits are monetary control tools; accepting deposits is not a control measure.
If a person supplements his current income by drawing on past savings in order to make both ends meet, he is said to be living
Answer: C (on his savings)
Spending past savings to add to current income is living on one's savings (dissaving).
Which of the following is not a set of measures of central tendency?
Answer: D (Median and percentage)
Mean, median and mode are the measures of central tendency; a percentage is not one.
The diagram below is a
Answer: B (pie chart)
A circle divided into sectors, each showing a share of the whole, is a pie chart.
Which of the following pairs can be referred to as middlemen?
Answer: D (Wholesalers and retailers)
Wholesalers and retailers stand between the producer and the consumer, so they are middlemen.
To the economist, a stock of goods existing at a particular time and conforming to certain requirements such as having utility, money value and being limited in supply, is known as
Answer: C (wealth)
In Economics, wealth is a stock of goods that have utility, money value and are scarce.
The decision to consume more of one product will under normal circumstances imply that
Answer: B (less of something else will be consumed)
With limited income, choosing more of one good means giving up some of another (opportunity cost).
Which of the following is not a problem of distribution of goods in Nigeria?
Answer: C (Ignorance of consumers)
Poor communication, poor storage, dishonest middlemen and inadequate markets hinder distribution; consumers' ignorance is not a distribution problem.
Mr. Idowu needs a television and a refrigerator. Each cost N500.00, the exact amount he has. If Mr. Idowu buys the television, the refrigerator would be regarded as the
Answer: C (opportunity cost)
The refrigerator is the alternative given up to buy the television, so it is the opportunity cost.
Foreign exchange control in Nigeria is enforced by the
Answer: D (Central Bank)
The Central Bank of Nigeria manages the country's foreign reserves and enforces exchange control.
The difference between the number of immigrants and emigrants is
Answer: C (net migration)
Net migration = immigrants − emigrants.
Risk bearing and managerial control are the main functions of the
Answer: C (entrepreneur)
The entrepreneur organises the other factors, takes the final decisions and bears the risk of the business.
Fixed unit of land (hectares): 5, 5, 5, 5, 5, 5
Variable unit of labour: 1, 2, 3, 4, 5, 6
Total output (TO): 10, 25, X, 60, 73, 82
Marginal product (MP): 10, 15, 21, 14, 13, Y
Which of the following pairs gives the values of X and Y in the table above?
Answer: D (X = 46, Y = 9)
X = 25 + 21 = 46 (TO rises by the MP); Y = 82 − 73 = 9.
Factory buildings, machinery and raw materials are known in Economics as
Answer: D (business wealth)
Assets used by firms for production are business wealth.
Abstention from consumption enables capital to be produced. Such abstention is called
Answer: A (saving)
Not spending part of income on consumption is saving, which provides funds for capital formation.
Tax evasion in Economics means
Answer: A (false declaration of assets)
Tax evasion is illegally escaping tax, for example by falsely declaring income or assets.
The magnitude of the national income of a country depends on all the following except the
Answer: C (mobility of labour)
National income depends on resources, technology, productivity and the factors of production; mobility of labour is the least direct of these.
The Quantity Theory of Money states that an increase in the quantity of money would bring about
Answer: C (a proportionate rise in prices)
From MV = PT with V and T constant, prices change in the same proportion as the money supply.
Section A: answer one question only from this section.
(a) What is meant by price elasticity of demand?
(b) The following figures are extracted from a schedule of demand and supply.
Price: N9.00, N10.00, N11.00
Quantity demanded: 1,050, 1,000, 950
Quantity supplied: 850, 1,000, 1,150
(i) Calculate the elasticity of demand when price rises from N10.00 to N11.00
(ii) State whether the demand in (i) above is elastic or inelastic
(iii) Calculate the elasticity of supply when price falls from N10.00 to N9.00
(iv) State whether the supply in (iii) above is elastic or inelastic.
(a) Price elasticity of demand is the degree of responsiveness of quantity demanded to a change in the price of the commodity
It is measured as percentage change in quantity demanded ÷ percentage change in price
(b)(i) % change in Qd = (950 − 1,000)/1,000 × 100 = −5%; % change in P = (11 − 10)/10 × 100 = 10%
Ed = 5% ÷ 10% = 0.5 (ignoring the minus sign)
(ii) Ed is less than 1, so demand is inelastic
(iii) % change in Qs = (850 − 1,000)/1,000 × 100 = −15%; % change in P = (9 − 10)/10 × 100 = −10%
Es = 15% ÷ 10% = 1.5
(iv) Es is greater than 1, so supply is elastic
Always divide the percentage change in quantity by the percentage change in price, using the starting values as the base.
Section A: answer one question only from this section.
Use the data in the table below to answer the questions that follow:
No of persons in thousands
Age group 0 – 16: 1955: 150; 1960: 143
Age group 17 – 45: 1955: 51; 1960: 107
Age group 46 – 60: 1955: 29; 1960: 33
Age group above 60: 1955: 15; 1960: 17
(a) What is the percentage increase in the working population between 1955 and 1960?
(b) Calculate the ratio of dependent population to the working population in 1955
(c) Calculate the ratio of dependent population to the working population in 1960
(d) Has the dependency ratio increased or decreased between 1955 and 1960?
Working population = ages 17–60; dependants = ages 0–16 and above 60
(a) Working population 1955 = 51 + 29 = 80 thousand; 1960 = 107 + 33 = 140 thousand
Increase = 60 thousand; percentage increase = 60/80 × 100 = 75%
(b) Dependants 1955 = 150 + 15 = 165 thousand; ratio = 165 : 80 = 33 : 16 (about 2.06 : 1)
(c) Dependants 1960 = 143 + 17 = 160 thousand; ratio = 160 : 140 = 8 : 7 (about 1.14 : 1)
(d) The dependency ratio decreased (from about 2.06 to about 1.14)
First separate the age groups into the working population (17–60) and the dependants (under 17 and over 60).
Section B: answer three questions only from this section.
'Price tends towards the level which equates supply with demand'. Explain this statement.
In a free market, price is determined by the forces of demand and supply
Demand falls as price rises; supply rises as price rises
Equilibrium price is the price at which quantity demanded equals quantity supplied (where the curves intersect)
Above equilibrium there is excess supply (surplus): sellers cut prices to clear stocks, so price falls
Below equilibrium there is excess demand (shortage): buyers compete and bid prices up, so price rises
These movements continue until the market clears at equilibrium, so price 'tends towards' that level
A diagram showing D and S curves, equilibrium price and quantity, surplus and shortage earns marks
A change in demand or supply sets a new equilibrium price
Explain the surplus and shortage on either side of equilibrium and how they push price back.
Section B: answer three questions only from this section.
Highlight the economic problems associated with the dependence of West African countries on primary production.
Unstable export earnings: prices of primary products fluctuate widely on world markets
Worsening terms of trade: prices of primary exports tend to fall relative to manufactured imports
Low and inelastic world demand for many primary products
Dependence on weather, pests and diseases makes output uncertain
Low income and low standard of living for producers; low value added
Little industrialisation: raw materials are exported unprocessed, so jobs and skills are created abroad
Balance of payments problems and dependence on foreign aid and loans
Mono-product economies are very vulnerable when that product's price falls
Difficulty in planning because government revenue is unpredictable
Exhaustion of non-renewable resources such as minerals
Give at least five problems, each with a short explanation.
Section B: answer three questions only from this section.
(a) Explain the term national debt
(b) State any four instruments of government borrowing in Nigeria.
(a) National (public) debt is the total amount a government owes to lenders at home and abroad
It arises when government borrows to finance a budget deficit or development projects
Internal debt is owed to citizens and institutions in the country; external debt is owed to foreign governments, institutions or lenders
(b) Any four instruments: Treasury bills
Treasury certificates
Development stocks / government bonds
Ways and means advances from the Central Bank
Loans from foreign governments and international institutions (e.g. World Bank, IMF)
Savings certificates / premium bonds
Define national debt clearly, then list four named instruments.
Section B: answer three questions only from this section.
Compare and contrast the private limited company with the public limited company.
Similarities: both are joint-stock companies registered under the Companies Act
Both have limited liability and a separate legal entity; both have continuity of existence
Both are managed by a board of directors and must file accounts
Differences: a private company has 2 to 50 members; a public company has a minimum of 7 (now 2) and no maximum
A private company cannot invite the public to buy its shares; a public company can sell shares to the public and be quoted on the Stock Exchange
Shares of a private company are not freely transferable; those of a public company are freely transferable
A private company usually has smaller capital; a public company can raise very large capital
A private company need not publish its accounts to the public; a public company must publish audited accounts
A private company uses 'Ltd' after its name; a public company uses 'Plc'
Give both similarities and differences; a table of differences is acceptable.
Section B: answer three questions only from this section.
(a) Outline the main features of the Malthusian theory on population
(b) Explain the developments that render the theory irrelevant to the present day situation.
(a) Population tends to grow in geometric progression (1, 2, 4, 8 …)
Food supply grows only in arithmetic progression (1, 2, 3, 4 …) because of diminishing returns on land
Population would therefore outgrow food supply, doubling about every 25 years
Positive checks (famine, disease, war) would reduce population
He recommended preventive checks: late marriage and moral restraint
(b) Improved agricultural technology (fertilisers, mechanisation, improved seeds) has raised food output faster than population
Birth control and family planning have slowed population growth
International trade lets countries import food
Medical advances and urbanisation changed population patterns; developed countries' population growth has slowed
Malthus ignored technology and the fact that more people also produce more
State Malthus's ratios clearly, then give reasons the predictions did not come true.
Section B: answer three questions only from this section.
What is money? Explain its characteristics.
Money is anything generally acceptable as a medium of exchange and in settlement of debts
Characteristics: general acceptability
Portability (easy to carry)
Durability (does not wear out quickly)
Divisibility into smaller units without loss of value
Homogeneity / uniformity (units of the same value are identical)
Scarcity / limited supply, so it keeps its value
Stability of value
Recognisability and difficulty to forge
Each characteristic should be explained briefly
Define money, then explain at least five characteristics.
Section B: answer three questions only from this section.
(a) Explain the term capital market
(b) How is the capital market different from the stock exchange?
(c) What are the advantages of the capital market?
(a) The capital market is the market for medium- and long-term funds
Institutions include development banks, insurance companies, mortgage banks, issuing houses and the Stock Exchange
(b) The capital market is the whole system for raising long-term funds; the stock exchange is one institution within it
The stock exchange deals mainly in buying and selling existing (second-hand) securities; the capital market also covers new issues and long-term loans
(c) Provides long-term funds for industry and government
Mobilises savings and encourages investment
Gives investors a way to earn income (dividends, interest)
Helps government finance development projects
Promotes economic growth and industrialisation
Helps indigenisation and wide ownership of companies
Remember: stock exchange ⊂ capital market.
Section B: answer three questions only from this section.
Describe the functions of the International Monetary Fund (IMF).
Gives short-term loans to members with temporary balance of payments deficits
Promotes international monetary co-operation
Promotes exchange rate stability and orderly exchange arrangements
Helps remove exchange controls and encourages convertibility of currencies
Promotes the growth of international trade
Gives technical assistance and advice on economic policy to members
Provides a forum for consultation on international monetary problems
Manages Special Drawing Rights (SDRs) to increase international liquidity
Describe at least five functions.