JAMB Economics 2015

23 reviewed questions with answers and explanations.

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Question 5

Structural unemployment is mainly caused by

  1. a change in the consumption pattern
  2. a change in the business cycle
  3. decrease in the output level
  4. Seasonal variation.
Answer and explanation

A: a change in the consumption pattern

A lasting change in the goods consumers want can reduce demand for some occupations and increase it for others. This mismatch of skills and vacancies causes structural unemployment.

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Question 8

The production table is: Labour | TP | AP | MP 1 | 6 | 6 | -- 2 | 14 | 7 | 8 3 | K | 9 | 13 4 | 40 | 10 | F Find K and F respectively.

  1. 13 and 27
  2. 27 and 13
  3. 10 and 27
  4. 27 and 10.
Answer and explanation

B: 27 and 13

At three workers, total product is 3 × 9 = 27, which also equals 14 + 13. The fourth worker adds 40 - 27 = 13, so K = 27 and F = 13.

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Question 9

In the theory of consumer behaviour, the sum of all marginal utilities is

  1. average marginal utility
  2. the initial marginal utility
  3. total utility
  4. diminishing marginal utility.
Answer and explanation

C: total utility

Marginal utility is the additional utility from each successive unit. Adding these increments from zero consumption gives total utility.

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Question 10

In a pure capitalist economy, the means and forces of production are owned and controlled by the

  1. public and private sectors
  2. feudal lords
  3. public sector
  4. private sector.
Answer and explanation

D: private sector.

Pure capitalism places ownership and control of productive resources in private hands. A mixed economy combines this with public-sector ownership.

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Question 13

The demand for money is referred to as the

  1. amount of money in fixed deposit
  2. desire to hold money in tangible assets
  3. need for money to invest
  4. desire to hold money in liquid form rather than investing it
Answer and explanation

D: desire to hold money in liquid form rather than investing it

Demand for money is the desired holding of liquid monetary balances rather than spending or committing the funds to other assets. It is a stock of desired balances.

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Question 14

In the theory of production, a producer is at equilibrium at a point where

  1. isocost is above the isoquant curve
  2. isoquant is below the isocost curve
  3. isocost is tangent to the marginal revenue
  4. isoquant is tangent to the isocost curve.
Answer and explanation

D: isoquant is tangent to the isocost curve.

For an interior least-cost input combination, the isoquant is tangent to the isocost line. The technical substitution rate equals the ratio of input prices.

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Question 15

Balance of trade shows the relationship between the

  1. internal and external trade
  2. total value of visible imports and exports
  3. deficit and surplus balance of payments
  4. total value of invisible imports and exports
Answer and explanation

B: total value of visible imports and exports

The balance of trade compares the monetary value of visible goods exports with visible goods imports. Services and other international flows are recorded elsewhere in the balance of payments.

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Question 18

Payment of interests on loans and the repayment of capital sum at a future date is

  1. balance debt
  2. debt servicing
  3. debt relief
  4. debt retaking.
Answer and explanation

B: debt servicing

Debt servicing consists of paying the interest and principal obligations associated with a loan according to its terms. It differs from debt relief, which reduces or cancels obligations.

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Question 23

Higher income taxes can be used to control

  1. demand-pull inflation
  2. high interest rates
  3. cost- push inflation
  4. hyperinflation.
Answer and explanation

A: demand-pull inflation

Higher income taxes reduce disposable income and household spending, other things equal. This contracts aggregate demand and can restrain demand-pull inflation.

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Question 25

An indifference map is made up of a set of

  1. consumers' total utility
  2. consumer surplus
  3. budget lines
  4. indifference curves.
Answer and explanation

D: indifference curves.

An indifference map contains several indifference curves, each representing bundles yielding one level of satisfaction. Different curves represent different ranked utility levels.

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Question 26

Recapitalization policy will enable commercial banks to

  1. employ more qualified workers
  2. open more branches
  3. reduce interest rate
  4. have a very strong capital base
Answer and explanation

D: have a very strong capital base

Recapitalization adds or strengthens a bank's capital. The direct purpose is a stronger capital base; lower lending rates or additional branches are not guaranteed consequences.

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Question 28

A major function of the International Monetary Fund is the

  1. provision of short-run loans to medium scale industries
  2. provision of long-term loans for infrastructure
  3. development of agriculture in member countries
  4. maintenance of stable exchange rates
Answer and explanation

D: maintenance of stable exchange rates

Promoting exchange stability and orderly exchange arrangements is among the IMF's purposes. It is not primarily a lender to individual medium-scale firms or an infrastructure project bank.

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Question 29

One of the major activities in the upstream sector of the Nigeria petroleum industry includes

  1. transportation of finished products
  2. refining of crude oil
  3. marketing of refined petrol
  4. exploration of crude oil.
Answer and explanation

D: exploration of crude oil.

Exploration searches for crude oil resources and belongs to the upstream petroleum sector. Refining, product marketing and distribution occur later in the chain.

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Question 30

The law of supply states that the

  1. higher the price the higher the quantity supplied
  2. quantity supplied is always equal to the quantity demanded
  3. lower the price the higher the quantity supplied
  4. higher the price the lower the quantity supplied.
Answer and explanation

A: higher the price the higher the quantity supplied

The law of supply states that, other things equal, a higher price induces a larger quantity supplied. It describes movement along a normal upward-sloping supply curve.

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Question 32

The basis for international trade is the

  1. differences in natural resources endowment
  2. differences in the population size
  3. prevailing interest rate on multilateral loans
  4. economic system in practice.
Answer and explanation

A: differences in natural resources endowment

Differences in resource endowments can create differences in production costs and comparative advantages. These differences help explain why countries exchange goods rather than producing everything themselves.

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Question 33

Training farmers in improved farming techniques is a major activity of

  1. intermediate workers
  2. middlemen
  3. extension workers
  4. creditors.
Answer and explanation

C: extension workers

Agricultural extension workers communicate research and practical farming methods to farmers. Training in improved techniques is a central part of this advisory role.

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Question 34

In a free market economy, prices are determined by

  1. consumers
  2. producers
  3. the central government
  4. the forces of demand and supply.
Answer and explanation

D: the forces of demand and supply.

In a free market, interactions between buyers' demand and sellers' supply establish prices. Neither side alone normally dictates the competitive market price.

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Question 38

Government can protect consumers from exploitative prices by introducing

  1. minimum price
  2. price differentiation
  3. price floor
  4. maximum price.
Answer and explanation

D: maximum price.

A maximum price is a legal price ceiling. A binding ceiling can prevent sellers charging above that limit, although it may create shortages and does not guarantee sufficient supply.

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Question 39

If a fall in the price of commodity K brought about an increase in the demand for commodity Y, the two commodities are

  1. composites
  2. derived in nature
  3. substitutes
  4. complements
Answer and explanation

D: complements

Complementary goods are used together. A lower price for K encourages its use and raises demand for Y, indicating that the two goods complement each other.

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Question 44

The supply of agricultural products is mainly determined by

  1. consumers' taste
  2. consumers' income
  3. technology
  4. consumers.
Answer and explanation

C: technology

Technology affects how much agricultural output can be produced from given inputs and therefore shifts supply. Consumer taste and income primarily affect demand.

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Question 45

Determine the median of 6, 10, 5, 12, 20, 18, 20 and 4.

  1. 11
  2. 9.67
  3. 12.56
  4. 12.
Answer and explanation

A: 11

Ordering the eight observations gives 4, 5, 6, 10, 12, 18, 20, 20. The median is the average of the fourth and fifth values: (10 + 12)/2 = 11.

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Question 48

If Qd = 40-4P and P = N4, what is the quantity demanded?

  1. 30
  2. 32
  3. 24
  4. 26.
Answer and explanation

C: 24

Substitute P = 4 into Qd = 40 - 4P. Quantity demanded is 40 - 16 = 24 units.

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Question 50

The supply of farm produce is mainly determined by

  1. consumers' income
  2. weather conditions
  3. population
  4. consumers' taste
Answer and explanation

B: weather conditions

Weather affects crop growth, yields and harvest availability. Of these choices it is the direct physical influence on farm supply; income, taste and population mainly affect demand.

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