Document

1. The fundamental economic problem in every society is

A. the large number of the unemployed
B. Limited supply of productive resources
C. inadequate supply of money
D. corruption and mismanagement

2. A point X inside the production possibility curve indicates that

A. resources are fully utilized
B. the country is poor
C. some resources are idle
D. resources are not available

3. The major employer of labour in developing countries is the

A. tertiary sector
B. secondary sector
C. primary sector
D. industrial sector

4. The desire for profits is a major feature of

A. traditional economy
B. mixed economy
C. market economy
D. command economy

5. The wages of a group of workers in dollars is stated below; 40, 30, 70, 20, 60, 10, 10, 80, 30, and 10. What is the mean wage

A. $\$35$
B. $\$36$
C. $\$37$
D. $\$38$

6. If the coefficient of price elasticity of demand of a product is zero, then its demand curve will be

A. parallel to the quantity axis
B. parallel to the price axis
C. negatively sloped
D. positively sloped

7. If the demand function is Qd = -0.5 + 20, calculate the quantity demanded when price is $\$15.0$

A. $-\$27.50$
A. $-\$12.50$
C. $\$12.50$
D. $-\$27.50$

8. If less of a good is bought as one’s income increases, such a good is

A. a normal good
B. a luxury
C. a necessity
D. an inferior good

9. The demand for coffee and tea is

A. joint
B. competitive
C. composite
D. derived

10. What effect will an increase in the supply of fish have on the meat market

A. a fall in equilibrium price and quantity
B. an increase in equilibrium price and quantity
C. an increase in equilibrium price and a fall in quantity
D. both equilibrium price and quantity will remain unchanged

11. Which of the following factors is not a condition for a change in the supply of a commodity

A. improved technology
B. cost of production
C. the price of the commodity
D. government tax policies

12. Supply of agricultural products is likely to be elastic in the

A. intermediate period
B. long-run
C. market period
D. short-run

13. Two commodities X and Y are in joint supply when

A. X is a by-product of Y
B. X and Y are produced by the same firm
C. increase in the quantity of X leads to a decrease in Y
D. X and Y cannot be produced in the same process

Table 1

Units of Quantity Consumed	Total Utility	Marginal utility
0	–	–
1	10	10
2	15	5
3	17	2
4	18	1
5	18	0

14. The Table1 above illustrates the law of?

A. diminishing returns
B. diminishing marginal productivity
C. diminishing marginal utility
D. variable proportion

15. When the price of a good is above the equilibrium, there will be

A. a shortage
B. a surplus.
C. unemployment
D. inflation

16. What happens when a minimum price is imposed in a market?

A. Shortage occurs
B. Surplus occurs
C. market maintains its equilibrium
D. Many firms will close down

17. When an increase in inputs leads to a more than proportionate increase in output, there is

A. decreasing returns to scale
B. Increase in marginal product
C. increasing returns to scale
D. constant returns to scale

18. The short-run in production is the time period when

A. techniques of production can easily be changed
B. all factors of production are vaiable
C. at least a factor is fixed while others are variable
D. variable factors cannot be changed

The Table II below shows the short-run cost of a firm. Use it to answer the question below

Quantity(Kg)	Fixed Cost($)	Variable Cost($)	Total Cost($)	Marginal Cost($)	Average Cost($)
1	750	200	950	–	950
2	750	560	1310	360	655
3	750	900	P	Q	550

19. Calculate the value of Q

A. $\$350$
B. $\$340$
C. $\$360$
D. $\$370$

20. A cost of production that is positively related to output is the

A. total fixed cost
B. average fixed cost
C. variable cost
D. social cost

21. In perfect competition, the average revenue curve of a firm is

A. below the marginal revenue curve
B. downward sloping
C. the marginal revenue curve
D. convex to the origin

22. Which of the following means of funding a business is very reliable and cheap?

A. Bank loans
B. Loans from friends
C. Plough back profits
D. Debentures

23. Government in most cases influences the location of firms to

A. discourage private investors
B. ensure equitable distribution
C. reduce the cost of production
D. make the firms enjoy economies of scale

24. Middlemen are made up of

A. manufacturers, wholesalers, and consumers
B. manufacturers, wholesalers, and retailers
C. wholesalers, retailers and hawkers
D. wholesalers, retailers, and consumers

25. The Malthusian theory of population was proved wrong because

A. the practice of subsistence farming was encouraged
B. developing countries adopted birth control method
C. new lands and new methods of production were discovered
D. Malthus view was seen as an exaggeration

26. Human development can be improved if

A. banks give more loans to businessmen
B. large family sizes are encouraged
C. general education and training are encouraged
D. it is handled by the private sector only

27. The use of interest rates to control the money supply is a

A. control policy
B. monetary policy
C. developmental policy
D. fiscal policy

28. Agricultural productivity may be increased if

A. educational institutions are established in rural areas
B. commercial banks are established in rural areas
C. more infrastructural facilities are provided in rural areas
D. labour intensive method of agriculture is encouraged

29. A country is described as industrialized if

A. the contributions of industries to national income are high
B. traditional and modern sectors coexist
C. the country adopts an import promotion strategy
D. primary industries dominate the economy

30. Which of the following is a major advantage of establishing a tomato-processing factory in a country?

A. Local consumption will decrease
B. More unskilled labour will be employed
C. Foreign exchange will be conserved
D. It will attract more tourists

31. The total value of goods and services produced within the borders of a country is

A. net national product
B. net domestic product
C. gross domestic product
D. gross national product

32. Which of the following factors will not underestimate the national income?

A. Rapid decrease in prices
B. Increased subsistence production
C. Practice of specialization of labour
D. Increase in value of services not paid for

33. Which of the following items is not considered as a transfer payment?

A. Pension pay
B. Government subsidy
C. Students’ grant
D. Doctor’s salary

34. Which of the following is true of the value of money? It

A. is positively related to the price level
B. depends on the value people attach to it
C. is determined by the government
D. is inversely related to the price level

35. The motive for holding money to meet unforeseen events is termed

A. precautionary demand
B. transactions demand
C. liquidity demand
D. speculative demand

36. An increase in the prices of factor inputs may result in

A. demand-pull inflation
B. stagflation
C. open inflation
D. cost-push inflation

37. Insurance Companies are similar to commercial banks in that they

A. Compensate their customers for losses
B. act as lender of last resort
C. help in maintaining monetary stability in a nation
D. help in mobilizing savings for investment

38. What happens when the central bank increases the bank rate?

A. Amount of borrowing increases
B. Amount of borrowing decreases
C. Supply of money increases
D. Commercial banks are not affected

39. Citizens are protected from the government’s arbitrariness in taxation by the canon of

A. elasticity
B. flexibility.
C. economy
D. certainty

40. In a period of unemployment and falling prices, the government should adopt a

A. zero-based budget
B. budget deficit
C. balanced budget
D. surplus budget

41. In most developing countries, a large percentage of the labour force is engaged in

A. trading
B. mining
C. Agriculture
D. manufacturing

42. In most underdeveloped countries, development plans do not achieve their objective due to

A. poor coordination between local and national governments
B. exportation of more primary products
C. lack of educational institutions in those countries
D. urban-rural migration of citizens

43. Balance of trade involves the exchange of

A. goods only
B. services only
C. goods and services
D. goods and capital

44. An improvement in a country’s terms of trade means that the

A. nation can export more services
B. nation’s receipts on export are equal to payments on imports
C. value of her imports is lower than her exports
D. visible exports is less than visible imports

45. Devaluation of currency may not correct a balance of payments deficit if the demand for export is

A. perfectly inelastic
B. perfectly elastic
C. fairly elastic
D. unitary elastic

46. One measure for financing a country’s balance of payments deficit is through

A. export diversification
B. import substitution
C. short-term borrowing from IMF
D. internal borrowing from commercial banks

47. The major achievement of the Economic Community of West African States (ECOWAS) is that it has

A. made capital more mobile
B. made possible the use of common currency
C. increased members’ allegiance to former colonial masters
D. widened the market for goods produced

48. Which of the following institutions is Concerned with expanding developing countries’ commodity trade

A. World Trade Organization (WTO)
B. United Nations Conference on Trade and Development (UNCTAD)
C. Economic Commission for Africa (ECA)
D. African Development Bank (AfDB)

49. Exploitation of forest resources becomes a major problem when

A. communities fight over ownership
B. they are not renewed
C. they are neglected
D. the supply is fixed in the long-run

50. Natural resources that are renewable are found in the

A. mining sector
B. traditional sector
C. agricultural sector
D. secondary sector

ANSWERS

Q.No	Ans		Q.No	Ans
1	D		26	C
2	C		27	B
3	C		28	C
4	C		29	A
5	B		30	C
6	B		31	C
7	C		32	D
8	D		33	C
9	A		34	D
10	D		35	A
11	C		36	D
12	B		37	D
13	B		38	B
14	C		39	C
15	B		40	D
16	B		41	C
17	C		42	B
18	B		43	C
19	B		44	C
20	C		45	A
21	C		46	C
22	C		47	D
23	C		48	B
24	C		49	C
25	C		50	C