JOINT UNIVERSITIES PRELIMINARY EXAMINATIONS BOARD

SEPTEMBER 2021 EXAMINATIONS

ECONOMICS Time Allowed: 3 Hours

SECTION A: MULTIPLE CHOICE QUESTIONS

Answer all questions in this section.

Use the OMR answer sheet provided to answer the questions.

Follow the instructions on the OMR sheet.

SECTION B: ESSAY QUESTIONS

Answer FOUR questions; ONE question from each course.
Ensure you read and follow all the Instructions on the cover page of the Answer Booklet.

JMS 403 Turn Over

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SECTION A: MULTIPLE CHOICE QUESTIONS

Answer ALL Questions

1. When a fall in the price of a commodity leaves the quantity demanded unchanged, demand
is said to be
A. fairly elastic.
B. fairly inelastic.
C. perfect elastic.
D. perfectly inelastic.

2. The Average Fixed Cost (AFC) curve falls continuously with increasing output but does not
touch the X-axis. This means that the AFC curve is
A. U- shaped.
B. upward sloping.
C. asymptotic to the origin.
D. fixed or horizontal .

3. When an increase in consumers’ income leads to an increase in the quantity demanded of a

good, then the good is
A. a normal good.
B. a necessity.
C. an inferior good.
D. a giffen good.

4. Price ceilings lead to

A. shortage of commodity .
B. surplus of commodity.
C. market clearing.
D. excess supply.

5. A country’s national income is affected positively by one of the following factors

EXCEPT the
A. availability of natural resources.
B. number and quality of labour force.
C. state of the technical knowledge.
D. quantity and quality of water resources.

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 6. What is the mercantilist view on trade?
A. Maximizing welfarism.
B. Positive balance of trade and balance of payment.
C. That agriculture is the main stay of the economy.
D. Encourages crude oil exploitation.

7. Which of the following will occur if Nigeria devalues her currency?

A. Increasing population.
B. Increasing import.
C. Reduced export.
D. Cheaper export.

8. Pricing and output decisions of sellers are highly interdependent on market known as
A. Oligopoly.
B. Perfect competition.
C. Monopoly.
D. Monopolistic competition.

9. In a mixed economy like Nigeria, variation in income distribution is a result of

A. political instability.
B. free market mechanism rewarding merit and productivity.
C. too much money in the economy.
D. one’s academic achievement.

10. At the point of profit maximization, MR = MC where

A. MR is falling.
B. MR is maximum.
C. AR is falling below MR.
D. MC cuts MR from below.

11. The equilibrium of a profit-maximizing competitive firm is given by the point where
A. MC = AC
B. MC = MR
C. MC = MR = AR = D
D. MC = AR = D

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12. A closed economy is a national economy that
A. does not interact economically with the rest of the world.
B. has a stock market that it is not open to traders from outside the country.
C. has extensive trading and financial relationships with other national economies.
D. has not established diplomatic relations with other national economies.

13. At equilibrium, aggregate expenditure is equal to aggregate

A. consumption.
B. investment.
C. income.
D. savings.

14. Which of the following is an automatic stabilizer?

A. Military spending.
B. Spending on public schools.
C. Unemployment benefit.
D. Increased exchange rate.

15. Under flexible exchange rates, a deficit could be corrected by

A. freezing the gold point.
B. appreciation of other currencies.
C. removing export subsidies.
D. removing tariffs.

16. A major factor affecting the value of money is the

A. price level.
B. banking habit.
C. transactionary motive.
D. spending habit of consumers.

17. A balanced budget is defined as a condition of

A. balance of payments equilibrium.
B. equality of aggregate demand and aggregate supply.
C. equality of planned receipts and planned expenditure.
D. equality of planned exports and planned imports.

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18. ECOWAS will enable member countries to achieve
A. comparative political advantage over other countries not in the region.
B. a large market for their products.
C. military superiority over countries not in the region.
D. lower the transportation cost of goods within the region.

19. Population density refers to

A. densely populated urban centres.
B. the total area divided by the total population.
C. densely populated rural areas.
D. the total population divided by the total area.

20. A change in demand for a normal good implies that there is a

A. change in quantity demanded as price changes.
B. shift in the demand curve.
C. movement along a given demand curve.
D. change in the price elasticity of demand.

21. If Mr Young obtains a N50000 loan from a bank for the purpose of providing
household needs, this demand for money is said to be
A. transactionary and speculative.
B. transactionary.
C. speculative.
D. precautionary and speculative.

22. Which of the following relationships is the concern of Malthusian theory?

A. Population growth rates of the rich and poor nations.
B. Population density and national income.
C. Population growth rate and natural resources.
D. Age distribution of population.

23. Combined positive demand and negative supply shock of the same magnitude will
A. raise equilibrium price and quantity.
B. raise equilibrium quantity and leave price unaffected.
C. raise equilibrium price but leave equilibrium quantity unaffected.
D. reduce equilibrium price and quantity.

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24. An abnormal supply curve is also known as
A. downward sloping supply curve.
B. linear supply curve.
C. regressive supply curve.
D. upward sloping curve.

25. Which of the following is the international cartel formed to stabilise the world oil market?
A. Economic Commission for Africa.
B. International Monetary Fund.
C. Organisation of Petroleum Exporting Countries.
D. Organization of Petroleum importing countries.

26. Which of the following determines wage rate in a market setting?

A. Aggregate supply.
B. Price of material used.
C. Output of labour.
D. Market demand and supply of labour.

27. One of these is the primary objective of NDIC.

A. Giving protection to the CBN against fraud.
B. Provision of regulations guiding financial houses.
C. Giving protection to banks against fraud.
D. Giving protection to bank depositors.

28. Which of the following is concerned mainly on the types, sources and uses of government
income?
A. Public expenditure.
B. Public budget.
C. Public finance.
D. Public revenue.

29. In computing national income, transfers are excluded because

A. they are received only by the poor.
B. the figures reduce the size of the national income.
C. it is difficult to get the exact figure.
D. they are not payment for productive services.

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30. The labour force of a country is best described as the number of people
A. receiving pension.
B. within the working age.
C. in paid employment.
D. within the retirement age.

31. Those who are better off during inflation includes one of the following.
A. Buyers of goods.
B. Creditors.
C. Debtors.
D. Those who anticipate the rise in prices.

32. Liquidity preference is the

A. need to borrow money for short periods to meet some temporary crises.
B. wish to hold more funds for precautionary purposes.
C. need to increase the money supply in order to lower the interest rate.
D. demand to hold money as assets rather than as stocks.

33. The effect of an increase in demand for a commodity accompanied by a decrease in

supply will be to
A. raise the price of the commodity and affect the quantity in an indeterminate way.
B. decrease the equilibrium quantity and affect the price in an indeterminate way.
C. raise its price as well as the equilibrium quantity.
D. lower its price while affecting the equilibrium quantity in an indeterminate way.

34. The distinguishing characteristic between the money market and the capital market lies
in whether the
A. securities are primary or secondary.
B. debt instruments provided are long-term or short-term.
C. funds mobilized are private or public.
D. securities are in debentures or ordinary shares.

35. Securities are described as listed when they are

A. mobilized as long-term debt instruments.
B. traded on a recognized stock market.
C. bought and sold purely for development purposes.
D. mobilized as short-term debt instruments.
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36. When two variables are positively related, the graph of the relationship
A. is a downward-sloping curve.
B. has a negative intercept.
C. is a straight line.
D. is an upward-sloping curve.

37. Short-run period in production is a period too short for a firm to be able to change its
A. scale of operation.
B. total revenue.
C. variable inputs.
D. total outputs.

38. All economies are faced with a major problem of how to

A. allocate scarce resources.
B. improve trade among nations.
C. increase consumption of imported goods.
D. transform from a developing to a developed economy.

Answer the next Question with the following table.

Units Consumed TU MU
0 - -
1 8 8
2 15 7
3 21 6
4 26 ?
5 30 4

39. The table above exemplify the law of diminishing

A. marginal productivity.
B. marginal utility.
C. marginal rate of substitution.
D. returns.

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40. Under normal circumstances, a producer will bear the entire burden of taxation on his
output if the
A. supply of the good is more elastic than the demand.
B. demand for the product is purely elastic.
C. production of the commodity is subject to diminishing returns.
D. demand for his product is more elastic than the supply.

41. Which of the following is the firm that charges different prices for goods that have the
same qualities?
A. Effective monopoly.
B. Monopoly.
C. Discriminatory monopoly.
D. Pure monopoly.

42. Normative economics deals with

A. facts and not figures.
B. facts and figures.
C. value judgements.
D. what is and not what should be.

43. One of the financing assets traded in the capital market is

A. treasury bills.
B. commercial papers.
C. bankers’ acceptances.
D. long-term securities.

44. Over the years, the Nigerian naira depreciates relative to the United State dollars.
Who would benefit the most from this?
A. Nigerian consumers of USA goods.
B. Nigerians consumers of Nigerian goods.
C. USA consumers of Nigerian goods.
D. USA consumers of British goods.

45. In the quantity theory of money equation (MV=PQ) the M represents

A. quantity of money available for government spending.
B. monetary value of output.
C. quantity of money supply.
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 D. quantity of money available for consumption.

46. The measure of economic growth that is based on evaluation of the trend behaviour of
Aggregate Expenditure is
A. nominal measurement of growth
B. real output growth rate.
C. growth measured in per capita income.
D. growth in physical equality.

47. The total demand for goods and services in an economy is known as
A. complementary demand.
B. derived demand.
C. composite demand.
D. aggregate demand.

48. Which of the following occurs when equilibrium in the economy is at a level below the
potential output?
A. Inflationary gap.
B. Expenditure gap.
C. Recessionary gap.
D. Output gap.

49. The major aspect of the Keynesian revolution is the shift of emphasis from
A. supply side to demand side.
B. government control to private control.
C. fiscal policy to monetary policy.
D. government expenditure to borrowing.

50. Which of these schools of thought believe that aggregate demand is influenced by some
economic decisions and sometimes behave erratically?
A. Monetarists.
B. Keynesians.
C. Classicals.
D. Neo-Classicals.

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SECTION B: ECONOMICS ESSAY QUESTIONS
Answer FOUR Questions. ONE from each Course

ECN 001: PRINCIPLES OF ECONOMICS I

1. The market for Nigerian cassava flour has the following demand and supply equations:
QD + 15P = 1500
QS = 5P – 300
Suppose the market price per bag is observed by the government to be very cheap and
government decided to increase the price to N950 per bag,

(a) Calculate the equilibrium price and quantity before the price increase. [5 marks]

(b) What are the new quantities demanded and supplied after the price increase. [5 marks]

(c) Briefly explain the effect of the price increase on the consumers and farmers. [5 Marks]

2. (a) What is a perfectly competitive market? Briefly discuss the characteristics of a Perfect
competitive markets. [5 marks]
(b) With the aid of a diagram, discuss the necessary and sufficient equilibrium conditions
for a perfectly competitive market. [8 marks]
(c) Explain the term Price Discrimination. [2 marks]

ECN 002: PRINCIPLES OF ECONOMICS II

3. (a) Discuss the key functions of money. [9 Marks]

(b) With the use of adequate examples, explain the basic motives for keeping money in liquid
form by individuals in an economy. [6 Marks]

4. (a) Discuss the Keynesian view of the equilibrium output and full employment level. [8 Marks]
(b) Using an appropriate diagram, explain the concept of inflationary and deflationary gaps.
[7 Marks]

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ECN 003: APPLIED ECONOMICS I
5. On 20th August 2019, Nigeria partially closed its land border with its neighbouring countries.
As a student of Economics, assess the
(a) economic implications of this on the Nigeria economy. [12 marks]
(b) effect of this on the trade relationship between Nigeria and her neighbouring
countries. [3 marks]

6. (a) Discuss the statement that reads “Economic growth is a necessary but not sufficient
condition for Economic development”. [10 marks]
(b) For many years ago, Nigeria has consistently been having deficit Balance of Payment.
As a student of Economics, what could likely be the reasons for this? [5 marks]

ECN 004: APPLIED ECONOMICS II

7. (a) Define the term globalization. [2marks]
(b) What are the contributions of globalization towards economic development? [8marks]
(c) Highlight the functions of International Monetary Fund (IMF). [5marks]

8. All countries of the world focused majorly on economic growth as the most important goal
among other development goals. This is because, achieving economic growth can lead to the
achievement of economic development which is the ultimate. However, there is always an
opportunity cost of achieving any of these goals.
(a) Differentiate between economic growth and economic development. [5 marks]
(b) Aside from economic growth, critically examine other development goals that you know.
[10 marks]

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