Economics Questions and Answers
Economics questions and answers to help you prepare for JAMB, WAEC, NECO, Post UTME and job aptitude tests or interviews.
Economics questions and answers to help you prepare for JAMB, WAEC, NECO, Post UTME and job aptitude tests or interviews.
What happens when the central bank increases the bank rate in an economy?
Borrowing is discouraged
Customers increase their borrowing
Banks can increase their lending
Money supply increases
Correct answer is A
Central bank discourage borrowing when bank rate is increased. Bank rate is one of the ways the central bank control money supply in an economy. If the bank rate is high, the supply of money will fall and vice versa.
The stock exchange is an example of the
Labour market
Money market
Commodity market
Capital market
Correct answer is D
A stock exchange market is a market where securities can be bought and sold. It is an example of a capital market where long-term debt securities are traded.
The institutions in the capital market are: Central banks, Insurance banks, Development banks, Pension funds, Merchant banks, Stock exchange market, Investment (trust) banks, Issuing houses.
Scale of preference
Opportunity cost
Complementary demand
Double coincidence of wants
Correct answer is D
Double coincidence of wants simply mean searching for those who need what you have and at the same time has what you need. It is a major barrier to barter trade.
Holding money to take care of contingencies is
A speculative motive
A transactions motive
A precautionary motive
An expansionary motive
Correct answer is C
A precautionary motive is when people hold money to meet unforseen contingencies or circumstances e.g accident, sickness etc. It varies inversely with the level of income.
Demand-pull inflation is likely to be caused by
An increase in the cost of factor inputs
Increase in the income tax rate
Increase in bank lending rate
Increasingly large budget deficit
Correct answer is D
Demand-pull inflation occurs when there is excess demand of goods over supply. Excessive demand is a consequence whereby consumers have money purchasing power to buy goods and services.