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1.
For two substitute goods, the gross elasticity of demand is
.
A. greater than one but less than
B. zero
C. negative
D. positive
E. infinity
Explanation.
The higher the price of commodity ,A the higher the quantity Demanded of commodity B (A’.5 substitute). Hence the cross elasticity is positive.(D)

2.
If a person receives a higher wage than would be necessary to induce him to work, he is said to be receiving
.
A. rent
B. profit
C. interest
D. gain
E. moratorium
Explanation.
Moratorium is an inducement or grace received without actually working for it. (E)

3.
Which of this is likely to be inflationary
.
A. tax increase
B. budget surplus
C. increase in unemployment
D. wage increase
E. increase in labour supply
Explanation.
An increase in wage will increase the purchasing power of consumers and invariably the aggregate demand, it will tend to increasing price level(inflation)if not matched with increase in production. (D)

4.
A characteristic of a debenture is that
.
A. its yield is based on profits
B. its yield is fixed rate of interest
C. it has no redemption date
D. there is a voting when interest is paid
E. its interest is variable
Explanation.
Debenture is a loan to the company and it a attract a fixed of interest as usual. (B)

5.
Which of these is not include in measuring national income by the income approach
.
A. wages and salaries of public servants
B. students bursaries and scholarship
C. profit of international
D. income of self employed person
E. rents on property
Explanation.
Student bursaries and scholarships are transfer income which is excluded Natona income computation under income approach .(B)

6.
The revenue accruing to the seller of commodity X as a result of a fall in price will
.
A. increase
B. fall
C. first fall but increase later
D. remain unchanged
E. change noticeably
Explanation.
If the price of a particular commodity is reduced quantity demanded will increase gradually and the total revenue will first fall and increase later. Ans C

7.
Deflation is persistence fall in price in the general level and is usually caused by
.
A. a reduction in total demand
B. an increase in government spending
C. an increase in money supply to banks
D. an increase in aggregate demand
E. an increase in money supply relative to demand
Explanation.
Generally, fall in total demand will cause the price to fall, and t will fall persistently if not carefully checked . (A)

8.
Under partnership, investors who have no desire to be actively involved on the daytoday management of such organizations are called
.
A. stock brokers
B. sleeping partners
C. part-time investors
D. ordinary partners
E. debenture holders
Explanation.
Sleeping partners are partners that contributes to the smooth running of the business but does not participate in the day-to-day activities of business. (B)

9.
In a sole proprietorship, decisions are made by the
.
A. government
B. board of directors
C. management
D. shareholders
E. owners
Explanation.
A sole proprietorship business is owned, managed, and financed by an individual owner, thus decisions are made by the owners.(E)

10.
A greater burden of taxes on essential goods is borne by the
.
A. middle income group
B. higher income group
C. lower earning group
D. people falling between the middle and higher income group
E. top few richest people in an economy
Explanation.
The lower earning group usually from the group of final consumers and all burden of tax are shifted on them. (C)

11.
Demand as a factor of production is
.
A. a composite demand
B. a joint demand
C. a derived demand
D. an elasticity of demand
E. cross elasticity of demand
Explanation.
Factors of production are demanded not for their own sake but for what they will be used to produced. Hence, it is a derived demand.(C)

12.
One disadvantage of sole proprietorship is its
.
A. limited liability
B. high profits
C. high sense of ownership d) low credit rating
D. low failure value
Explanation.
The major disadvantage of sole proprietorship is limited capital expansion emanated From limited credit rating. (D)

13.
The monetary system that requires double coincidence of wants is known as
.
A. the gold standard
B. the uarter practice
C. the commodity system
D. the good exchange standard
E. the Cheque system
Explanation.
Barter practice is the exchange system where goods and services are exchange directly. It involves double coindence of wants. (B)

14.
The marginal theory of distribution makes an assertion that the price of any factor depends upon its marginal
.
A. utility
B. productivity
C. rate of substitution
D. revenue
E. proceeds
Explanation.
Thus, for profit to be maximized, marginal products of factors of production must equal to their prices. Hence MP,=w and MPk,=r. (B)

15.
By using exchange controls, a country tries to eliminate a balance of payments deficit by
.
A. limited her imports to its currency of exports
B. reducing the nation's domestic price level
C. limiting her exports to its currency value of imports
D. overvaluing the country's
E. undervaluing the country's currency
Explanation.
Deficit balance of payment ( BOP) occur when imports are more than exports. Hence, will control it by limiting her imports to what can be financed by her currency of exports. (A)

16.
Economies of scale operate only when
.
A. marginal cost is falling with input
B. average cost is falling with output fixed cost is variable
C. fixed cost in variable
D. variable cost less than fixed cost
E. variable cost is equal to cost of output
Explanation.
Economics of scale only occurs in the long run when all factors of production are variable (C).

17.
If an increase in income induces a reduction in the demand fro beans, beans can be referred to as
.
A. a normal good
B. an inferior good
C. a substitute
D. a dash
E. a gifted good
Explanation.
An inferior goods will have a negative income elasticity. (B)

18.
Optimum population is desired because it enable an economy to attain maximum
.
A. per capital income
B. per capital output
C. per capital real income
D. per capital revenue
E. growth rate
Explanation.
An optimum population is a situation where available population can exploit available resources efficiently and per capital output is maximized. (B)

19.
Marginal cost curve intersects average cost cure
.
A. from above at its lowest point
B. from below before the lowest point
C. from below at its lowest point
D. from below after the lowest point
E. at the zenith of turn
Explanation.
The minimum point of average cost(AC) is the efficiency point and the firm will break-only where the margined cost curve intersects average cost curve from below at its Lowers point. (C)

20.
The concept of economics efficiency refers to
.
A. obtained the maximum output from available resources at the lowest possible cost
B. conservation of natural gas and oil deposits
C. equity in the distribution of national resources
D. production without waste
E. the limited wants unlimited resources dilemma
Explanation.
Since our want are unlimited and our resources limited in supply. Thus, economics seeks to obtain the maximum output firm available resources of the lowest possible cost.(A)

21.
A majorfactor affecting the value of money is the
.
A. price level
B. banking habit
C. transaction motive
D. divisible nature of money
E. transferability
Explanation.
A persistence increase in general price level will cause inflation and reduce the value of money, and the reverse is correct for deflation. (A)

22.
Which of the following is an example of invisible item on balance of payment account?
.
A. shipping and aviation
B. import and export
C. merchandise
D. bullions
E. tariffs
Explanation.
Invisible items are services transferred from one country to another. It includes shipping and aviation, tourism, education e.t.c. (A)

23.
The best index for international companies of standard of laying is the
.
A. cross national product
B. net national income
C. per capital income
D. cross national income
Explanation.
Per capita income is obtained by dividing the national income by the total population of a given country. It is used for international comparism of standard of living. (C)

24.
A major obstacle to economic development in many African countries
.
A. a rise in industrial output
B. low farm productivity
C. free trade
D. free interaction
E. controlled international relations
Explanation.
Many African countries have shifted the domain of the economy from Agriculture to some other area, this has lead to a significant fall in Agric products which services as input for industrial development (B)

25.
The most popular adopted industrialization strategy in West Africa is
.
A. import substitution
B. export promotion
C. ports development
D. infant industries potation.
Explanation.
Most west African countries are usually combated with deficite balance of payment (BOPs), thus, they usually embark on export promotion strategy as their industrialization strategy. (B)

26.
In economics, the pleasure, happiness or satisfaction received from product is called
.
A. Marginal cost
B. rational out come
C. status fulfillment
D. utility
Explanation.
Utility is the amount of satisfaction a consumer derived from consuming a particular commodity. (D)

27.
A person should consume more of something when it's marginal
.
A. benefit
B. cost exceeds its marginal benefit
C. marginal benefit
D. benefit is still positive
Explanation.
A consumer will consume more of a commodity when MU>MC On an ideal situation consumer maximizes satisfaction when the marginal benefit exquisite the marginal cost and the marginal benefit reduce as more and more of the commodity is consumed. Hence, consumer should consume more of the commodity to reduce marginal benefit and equate it with marginal cost (A)

28.
Macroeconomics can best be described as the
.
A. analysis of how a consumer tries to spend how a consumer tries to spend income
B. study of the large aggregates of the economy or the economy as a whole
C. analysis of how firms attempts to maximize their profits
D. study of how supply and demand determine prices in individual markets
Explanation.
Macro is derived from the Greek work “Makros” meaning “large” Hence, macroeconomics is the study of the economy at large. (B)

29.
When economists say that people act rationally in their self interest, they mean that individuals :
.
A. Look for and pursued e opportunities to increase their utility
B. generally disregard the interest of other
C. are mainly creatures of habit
D. are unpredictable
Explanation.
The selfish interest convention of Adam Smith implies that every individual operate in favor of his or her personal self. That is to increase their personal utility.(A)

30.
As related to international trade dumping
.
A. is a form of price discrimination illegal US antitrust law
B. is the practices selling goods in a general case for permanent tariffs'
C. is the practices buying goods in a general case for temporary tariffs'
D. is define d as selling more goods than allowed by an import quota
Explanation.
Option describes dumping It is a method used to get rid of some less valuable producer’ country.(B)

31.
A nation's production possibilities curve is bowed out from the origin because
.
A. wants virtually unlimited
B. The originator of idea drew it this way and modern economists follow this convention
C. resource are scarce
D. resources are not equally efficient in producing every goods
Explanation.
A hand-out CPC explain the concept of scarcity. It means that to increase the input of a product the input of another product, must be reduced at increasing rate.(C)

32.
If the production possibilities curve were a straight down sloping line, this would suggest that
.
A. it is possible to produce more of both product
B. resources are equally capable of satisfying consumer want
C. resource are scarce
D. the two products have identical prices
Explanation.
A downward slopping ppc implies a constant rate of a production. In other words. it implies an identical price for the two products.(C)

33.
Productive efficiency refers to
.
A. the use of the least cost method of production
B. the population of the product-mix most wanted by society
C. the full employment of all available resource
D. production at some points inside of the production possibilities curve
Explanation.
To operate efficiently is to operate along the ppc where all available resources are fully and gradually utilized. (C)

34.
Which of the following statement is correct?
.
A. if demand increase, equilibrium price will fall.
B. if supply increase demand decreases, equilibrium price will fall.
C. If demand decreases and supply declines and demand remains constant, equilibrium price will fall.
D.
Explanation.
It supply increase and demand decrease, the equilibriurn price will fall. Option D is obviously correct, But for the other option the issue of decrease in price will depend on the rate of increase or decrease of demand or supply which is not given. (B)

35.
If depreciation exceeds gross investment:
.
A. the economy's stock of capital may be either growing or shrinking.
B. the economy's stock of capital I growing.
C. Net investment is Zero .d the economy's stock of capital is shrinking.
D.
Explanation.
Economy develop on surplus net capital formation i.e net investment thus if capital consumption (depreciation) is so large as to absorb more than the whole capital formation, the economy stock of capital (i.e. initial capital formation)will slowdown. (D)

36.
Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed the unemployment rate is:
.
A. 3%
B. 6%.
C. 7%.
D. 5.3%.
Explanation.
50-.47X100=3X100=6%(B) 50 50 Unemployment rate is the proportion of unemployed labour to total labour force.

37.
Unemployment involving a mismatch of the skill of unemployed workers and the skill require for available jobs is called:
.
A. Frictional unemployment
B. structure unemployment
C. Cyclical unemployment
D. compositional unemployment
Explanation.
Structural unemployment occurs when there is sudden change in the structure of the economy If a labour intensive economy suddenly change to a capital intensive economy standard unemployment will no doubt occur

38.
The greater is the marginal propensity to consume, the
.
A. smaller is the marginal propensity to save
B. Higher is the interest rate.
C. Lower is the average propensity consumed.
D. Lower is the price level.
Explanation.
Note that the total income is divisible into consumption and saving i.e Y c+s.Hence,the MPc +MPs=1 Therefore, the higher the MPc the lower the mps, since the two must add up to 1(A)

39.
Investment and saving are, respective;
.
A. Income and wealth
B. Stocks and flows
C. Injection and leakages
D. Leakages and injections.
Explanation.
Given a circular flow of income for a particular economy investment tends to boost the flow of income hence it is called injection whereas savings will slower the pace of the circulation flow of income hence named withdrawal! leakages (C)

40.
The amount by which government expenditures exceed revenues during a particular year is the;
.
A. public debt
B. Budget deficit.
C. full employment.
D. GDP gap.
Explanation.
For a particular fiscal year, if government decides to spend more than its expected revenue it will surely incur deficit this type of budget is termed Budget Deficit.(B)

41.
The value of money varies:
.
A. inversely with the price level
B. Directly with the volume of employment.
C. Directly with the price level.
D. Directly with interest rate.
Explanation.
According to the fisherian equation of exchange, Mv=PT money supply varies with price level, given that the velocity and the level of transaction is constant (D)

42.
If actual reserves in the banking system are #40,000 excess reserves are #10,000. And checkable deposit are #240,000.then the legal reserve requirement is
.
A. 16.1%.
B. 12.5%:
C. 20%
D. 5%
Explanation.
LRR= Initial Deposit x 100 = 40,000 X100 16.1% Deposit Greated 240,000

43.
The discount rate is the interest:
.
A. rate at which the Central Bank of Nigeria lends to the Nigeria government.
B. Yield on long-term government bonds.
C. Rate at which the Central bank of Nigeria lend money to commercial Banks.
D.
Explanation.
The discount rate or the minimum rediscount rate (MRR) in Nigeria is the rate at which the central bank of Nigeria lends to commercial banks to. control money supplying in the economy (D)

44.
The basic formula for the price elasticity of demand coefficient is:
.
A. Absolute decline in quality demand/absolute increase in price
B. Absolute decline in price fabsolute increase in quality demand
C. change in quantity demand
D. % change in price 1% change in price.
Explanation.
Elasticity of demand is the proportional change in quantity demand to proportional change in price

45.
If a firm can sell 30,000 units of products A at SlO per units and 5,000 at S8, then:
.
A. the price elasticity demand 0.44.
B. A is a complementary good.
C. The price elasticity of demand is 2.25.
D. A is a inferior good.
Explanation.
3,000-5000 x 10 - 2000 x 10 3000 10-8 3000 2 = 3.33 Option B seems to close to the answer but substitusbility and complimentary of a commodity is deforming with cross elasticity

46.
Assuming a household would consume #100 worth of goods and services per week if it weekly income where Zero and would spend an additional #80 per week for each #100 additional income. It Q represents consumption and Y income, the summarizes this relationship is
.
A. C =80+100Y.
B. C=1 00 ÷8Y.
C. C=1 00 + 0.8Y
D. C=80+11 Y.
Explanation.
C=C°+CY C°=100 (i) CY = L= 0.8Y(ii) C = 100 + 0.8y (C)

47.
For a bicycle company, an economist predicted that other things being equal. a rise in consumer incomes will increase the demand for bicycle, this prediction is based on the assumption that.
.
A. There are many goods that are substitute for bicycle. (b)there are many goods that are complementary to bicycle.
B. there are few goods that are substitute for bicycle.
C. Bicycle are normal goods.
D.
Explanation.
If the quantity demanded of a commodity increases from the increase in consumers’ income, then such goods is a normal goods (D) It is a perfectly elestic demand curve which reflect no change in price of the commodity irrespective of the change in quantity demanded.

48.
A demand curve which is parallel to the horfzontal axis:
.
A. Perfect inelastic
B. Perfect elastic
C. relatively inelastic
D. relatively elastic.

49.
Allocation efficiency occurs only at that output where:
.
A. Marginal benefit exceeds marginal cost the greatest amount.
B. consumer surplus exceeds producer surplus by the greatest amount.
C. The areas if consumer and producer surplus are equal.
D. the combined amount of consumer surplus and producer surplus are maximized.
Explanation.
Allocation efficiency is reached only at equilibrium point. At this point, both producer’s and consumer’s surplus must be equal. (C)

50.
The primary problem of economic is
.
A. To obtain more equitable distribution of money income
B. Production of a given output with the lowest cost combination of factors of production
C. Adoption of capital-intensive technology
D. Increase the quantity of the factors of production.
Explanation.
The primary concern of economics is to satisfy needs with available limited resources. (B)

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