2016 JAMB ECONOMICS PAST QUESTIONS AND ANSWERS

Deficit financing involves a government spending more than its revenue to stimulate economic activity. The primary goal is to stimulate investment by injecting extra funds into the economy, encouraging businesses to expand. It is not aimed at reducing aggregate demand, increasing revenue directly, or curbing inflation—which is often a side effect of deficit financing.

The money market is designed for short-term borrowing and lending, usually for periods up to one year. It allows businesses to obtain short-term funds to meet immediate financial needs. Purchasing capital equipment and obtaining long-term funds are functions of the capital market, not the money market.

A monopolist maximizes profit where marginal revenue equals marginal cost (MR = MC). At this point, the cost of producing an additional unit equals the revenue gained, optimizing profit. P = MC is typical in perfect competition, and P = AC relates to normal profit conditions, not monopolistic settings.

Africa is generally at Stages 2 and 3 of the demographic transition. This means high birth rates with declining death rates, leading to rapid population growth. Stage 1 is high birth and death rates, and Stage 4 is low birth and death rates, which are more characteristic of developed countries.

ECOWAS is a form of economic integration aimed at promoting economic cooperation and regional integration among West African countries. It is not globalization, which is global in scope, nor is it a marketing board or an economic union (which implies a higher level of integration).

The mode is the number that appears most frequently in a data set. In this case, 32 appears twice while all other numbers appear only once. Therefore, 32 is the mode.

The level of consumer’s income significantly affects income elasticity of demand, which measures how quantity demanded changes with income changes. Price and availability of substitutes relate to price elasticity, while government policy may influence demand indirectly.

First, find the mean: (2+4+6+8+4+6)/6=5. Then, find the absolute differences from the mean, sum them, and divide by the number of observations: (3+1+1+3+1+1)/6=10/6≈1.67.

The level of income influences the precautionary demand for money, as individuals with higher incomes may hold more money for unexpected needs. Interest rates and price levels affect speculative and transactional demands, respectively.

Economies of scale mean that as production increases, the average cost per unit falls due to factors like bulk purchasing and operational efficiencies. The average cost does not rise or reach maximum under economies of scale.

For normal goods, as price decreases, quantity demanded increases, and vice versa, leading to a negative relationship between price and quantity. This inverse relationship results in a downward-sloping demand curve. Price acting as an incentive does not explain the negative slope.

(Note: The question refers to a diagram not provided. Assuming total cost is known for 20 units.) If the total cost for 20 units is ₦1,000, then average total cost is ₦1,000/20 = ₦50.00kg. Without specific data, this is the most logical answer given the options.

Multinational companies primarily engage in oil marketing and prospecting, meaning they search for oil reserves and sell petroleum products. They may establish refineries, but their core activities are exploration and marketing.

They invest in long-term financial instruments like bonds and real estate, providing capital for long-term projects. Cash and near money are for liquidity, while equipment is not typically held by insurance companies as assets.

Wages are closely tied to the marginal productivity of labor, which is the additional output produced by an extra unit of labor. Employers are willing to pay more if the worker contributes more to production.

In a command economy, the government makes all decisions about production methods, resource allocation, and distribution. Consumers and industries have little influence, and labor unions may have some input but do not make the final decisions.

Price elasticity of supply is calculated as (% change in quantity supplied) / (% change in price). It measures how responsive the quantity supplied is to a change in price.

Changes in cost of production affect supply because they alter the profitability of producing a good. If production costs rise, supply decreases. Changes in the commodity’s own price result in movement along the supply curve, not a shift.

Ordinary shareholders bear the greatest risk as they are last to be paid during liquidation and receive dividends after all obligations are met. Preference shareholders and debenture holders have priority over ordinary shareholders.

A monopoly exists when a single seller offers a unique product with no close substitutes, giving them significant market power. Oligopoly has few sellers, perfect competition has many sellers with identical products, and monopolistic competition has many sellers with differentiated products.

Stagflation refers to the combination of stagnant economic growth, high unemployment, and high inflation. It’s a challenging economic condition because inflation and unemployment are occurring simultaneously.

Poor access to credit facilities limits the ability of small businesses to invest and expand. While management and regulatory issues affect growth, lack of financing is a primary obstacle. The market size is relatively large in Nigeria, so it’s less of an issue.

Population affects demand because more people lead to higher overall consumption of goods and services. Incentives to workers and technology influence supply, while cost of production affects supply and pricing.

Gross National Product (GNP) is calculated as C + I + G + (X – M), where C is consumption, I is investment, G is government spending, X is exports, and M is imports. Therefore, option B is correct.

First, arrange the data in ascending order: 10, 14, 15, 18, 22, 28, 30, 35, 38. The middle number is the fifth one, which is 22. Therefore, the median is 22.

Average Product (AP) is calculated as Total Output divided by the number of units of input. For the 5th unit: AP = 353 kg / 5 = 70.6 kg.

Consumption pattern dictates what goods and services are in demand, guiding producers on what to produce. Technology affects how to produce, while distribution and production volume are subsequent considerations.

The Nigerian National Petroleum Corporation (NNPC) is tasked to oversee the development of the oil sector, including regulation, supervision, and ensuring optimal performance. It doesn’t fix prices or develop oil-producing areas directly.

A low level of standard of living is characteristic of underdeveloped economies, often due to low income, poor healthcare, and limited education. High unemployment and low population growth may also be present, but standard of living is a primary indicator.

Taxes on land are generally borne entirely by the owners because land is in fixed supply, and the tax cannot be shifted to others. Users may pay rent, but the tax incidence rests with the landowner.

Deregulation aims to increase efficiency in pricing and distribution by allowing market forces to determine prices, reducing shortages, and improving supply chains. It may not end imports or foreign dominance immediately but improves sector performance.

Devaluing a country’s currency makes exports cheaper and imports more expensive, encouraging export growth and reducing imports, thus correcting the deficit. Reducing imports also helps, but devaluation is a direct monetary policy tool.

Net exports are calculated as exports minus imports. If imports exceed exports, net exports are negative, indicating a trade deficit. Depreciation and external reserves relate to other economic factors.

Set Qd = Qs: 30 – 3P = 9P – 15 ⇒ 30 + 15 = 9P + 3P ⇒ 45 = 12P ⇒ P = 45 / 12 ⇒ P = ₦3.75.

Inadequate infrastructure like poor roads, unreliable electricity, and limited access to technology hampers economic development. Overpopulation and weather conditions are challenges but not as critical as infrastructure deficits.

An indifference curve shows combinations of two goods that provide equal satisfaction to a consumer. Budget lines show income constraints, production possibility curves show production capabilities, and isocost curves relate to cost combinations for producers.

For inferior goods, demand decreases as income increases, and vice versa. Consumers opt for higher-quality substitutes when they have more income. Price changes affect normal goods differently.

A partnership requires a minimum of 2 partners to be formed. This is the basic legal requirement for a partnership entity.

With diminishing returns, adding more of a variable input increases total cost at an increasing rate, so total variable cost rises at an increasing rate. This is due to decreased efficiency.

Marginal Product (MP) = Change in Total Output / Change in Input. Between the 6th and 7th units: MP = 563 kg – 483 kg = 80 kg.

The range is the difference between the highest and lowest values: 71 – 15 = 56.

Without the diagram, but generally, consumer equilibrium occurs where the budget line is tangent to the highest attainable indifference curve, often labeled as point K in textbooks.

Rearranging the equation: 4P = Qs + 30 ⇒ Qs = 4P – 30. Plug in P = 18: Qs = 4(18) – 30 = 72 – 30 = 42.0.

At consumer equilibrium, the Marginal Rate of Substitution (MRS) equals the ratio of the two prices of goods, ensuring maximum satisfaction given the budget constraint.

Inadequacy of infrastructural facilities like power supply, transportation, and water hinder industrial growth. Equipment breakdowns and government participation are issues but less impactful than infrastructure deficits.

Cement production requires bulky raw materials like limestone, so proximity to raw materials reduces transportation costs and increases efficiency. Markets and infrastructure are important but secondary in this case.

Persistent gas flaring is a major environmental and economic issue, wasting resources and causing pollution. While other options are concerns, gas flaring is a significant problem that needs addressing.

Contractionary policy aims to reduce inflation by decreasing aggregate demand, so it results in a fall in the level of inflation. It doesn’t increase aggregate supply or demand.

Underpopulation occurs when there are too few people to fully utilize resources efficiently. Overpopulation is the opposite, and optimum population is the ideal balance.

Unfavorable weather conditions can drastically affect agricultural output, leading to income instability. Illiteracy and land tenure affect productivity but weather has a direct impact on income fluctuations.