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The short-run in economics is best described as a period:
a) Of exactly one year b) In which all factors of production are variable c) In which at least one factor of production is fixed d) In which no production takes place
Answer: c) In which at least one factor of production is fixed -
A firm is said to be a price-taker when:
a) It can influence the market price b) It sets price above marginal cost c) It accepts the market price as given d) It charges different prices to different buyers
Answer: c) It accepts the market price as given -
Which of the following is an injection into the circular flow of income?
a) Taxation b) Savings c) Imports d) Government expenditure
Answer: d) Government expenditure -
The law of diminishing marginal utility states that:
a) Total utility falls as more units are consumed b) Marginal utility rises as consumption increases c) As more units of a good are consumed, marginal utility eventually declines d) Utility cannot be measured
Answer: c) As more units of a good are consumed, marginal utility eventually declines -
A budget deficit occurs when:
a) Government revenue exceeds government expenditure b) Government expenditure exceeds government revenue c) Exports exceed imports d) Imports exceed exports
Answer: b) Government expenditure exceeds government revenue -
The demand curve for a normal good slopes downward because of:
a) The income effect and substitution effect b) The law of increasing returns c) Rising marginal cost d) Excess supply in the market
Answer: a) The income effect and substitution effect -
If two goods have a negative cross elasticity of demand, they are:
a) Substitutes b) Inferior goods c) Complements d) Normal goods
Answer: c) Complements -
The equilibrium national income in a closed economy with no government is:
a) Y = C + G b) Y = C + I c) Y = C + I + G + (X−M) d) Y = S + T + M
Answer: b) Y = C + I -
Which of the following best describes the concept of opportunity cost?
a) The monetary price of a good b) The cost of producing one more unit c) The value of the next best foregone alternative d) Total cost minus fixed cost
Answer: c) The value of the next best foregone alternative -
A monopsonist in the labour market is:
a) A single seller of labour b) A single buyer of labour c) A firm with many competitors d) A trade union
Answer: b) A single buyer of labour -
Which of the following is a characteristic of a perfectly competitive market?
a) Product differentiation b) Barriers to entry c) Homogeneous products d) Few sellers
Answer: c) Homogeneous products -
When average cost is falling, marginal cost must be:
a) Rising b) Equal to average cost c) Below average cost d) Above average cost
Answer: c) Below average cost -
The concept of elasticity of supply measures:
a) How price responds to a change in quantity supplied b) How quantity supplied responds to a change in price c) The speed at which supply adjusts to demand d) The cost of increasing production
Answer: b) How quantity supplied responds to a change in price -
Which of the following is NOT a function of money?
a) Medium of exchange b) Store of value c) Unit of account d) Determinant of wages
Answer: d) Determinant of wages -
National income at factor cost can be converted to national income at market prices by:
a) Adding subsidies and subtracting indirect taxes b) Adding indirect taxes and subtracting subsidies c) Subtracting both indirect taxes and subsidies d) Adding both indirect taxes and subsidies
Answer: b) Adding indirect taxes and subtracting subsidies -
Given C = 50 + 0.8Y and I = 100, what is the equilibrium level of national income?
a) 500 b) 600 c) 750 d) 800
Answer: c) 750 -
The isocost line shows:
a) All combinations of inputs that produce equal output b) All combinations of two inputs that can be purchased for a given total cost c) The minimum cost of producing a given output d) The maximum output achievable with given inputs
Answer: b) All combinations of two inputs that can be purchased for a given total cost -
Which stage of production is considered irrational because total product is declining?
a) Stage I b) Stage II c) Stage III d) Stage IV
Answer: c) Stage III -
The Phillips Curve illustrates the relationship between:
a) Price level and output b) Inflation and unemployment c) Savings and investment d) Money supply and interest rates
Answer: b) Inflation and unemployment -
A firm producing in the long run at minimum average cost is said to be operating at:
a) Technical efficiency b) Allocative efficiency c) Optimum scale of production d) Maximum profit point
Answer: c) Optimum scale of production -
Which of the following best explains frictional unemployment?
a) Unemployment caused by a fall in aggregate demand b) Unemployment caused by workers being between jobs c) Unemployment caused by automation d) Unemployment caused by seasonal variation in demand
Answer: b) Unemployment caused by workers being between jobs -
In a mixed economy:
a) All resources are owned by the state b) All resources are privately owned c) Both public and private sectors allocate resources d) Foreign investors control all production
Answer: c) Both public and private sectors allocate resources -
The multiplier effect in Keynesian economics refers to:
a) The increase in money supply from bank lending b) The proportional increase in national income resulting from an initial injection c) The rise in prices following an increase in money supply d) The expansion of exports following devaluation
Answer: b) The proportional increase in national income resulting from an initial injection -
Price discrimination is possible when:
a) All buyers have the same elasticity of demand b) Markets can be kept separate and resale is prevented c) The good is homogeneous d) There are many sellers in the market
Answer: b) Markets can be kept separate and resale is prevented -
Which of the following would cause a rightward shift in the supply curve?
a) An increase in input costs b) A rise in the price of the commodity c) An improvement in production technology d) An increase in taxes on the good
Answer: c) An improvement in production technology -
Terms of trade refers to:
a) The volume of a country’s exports b) The ratio of export prices to import prices c) The balance between imports and exports d) The rate at which one currency exchanges for another
Answer: b) The ratio of export prices to import prices -
An increase in the money supply, all else equal, will most likely lead to:
a) Deflation b) A fall in national income c) Inflation d) Appreciation of the currency
Answer: c) Inflation -
The Lorenz Curve is used to measure:
a) Economic growth b) Income inequality c) Price level changes d) Unemployment rates
Answer: b) Income inequality -
Which of the following is a characteristic of public goods?
a) Rivalry and excludability b) Non-rivalry and excludability c) Non-rivalry and non-excludability d) Rivalry and non-excludability
Answer: c) Non-rivalry and non-excludability -
Depreciation of the naira will most likely:
a) Make Nigerian exports cheaper and imports more expensive b) Make Nigerian exports more expensive and imports cheaper c) Have no effect on trade d) Reduce Nigeria’s foreign reserves
Answer: a) Make Nigerian exports cheaper and imports more expensive -
The Malthusian theory of population argues that population:
a) Grows arithmetically while food supply grows geometrically b) Grows geometrically while food supply grows arithmetically c) And food supply grow at the same rate d) Is always at the optimum level
Answer: b) Grows geometrically while food supply grows arithmetically -
When marginal revenue equals zero, total revenue is:
a) Falling b) Rising c) At its maximum d) At its minimum
Answer: c) At its maximum -
The concept of comparative advantage in international trade was developed by:
a) Adam Smith b) John Maynard Keynes c) David Ricardo d) Alfred Marshall
Answer: c) David Ricardo -
A regressive tax is one in which:
a) The tax rate rises as income rises b) Everyone pays the same absolute amount c) The proportion of income paid in tax falls as income rises d) Only high-income earners are taxed
Answer: c) The proportion of income paid in tax falls as income rises -
Economic rent is best defined as:
a) Payment for the use of land only b) Any payment above transfer earnings c) The cost of hiring labour d) Interest paid on borrowed capital
Answer: b) Any payment above transfer earnings -
If the price elasticity of demand for a good is 0.4, demand is:
a) Elastic b) Perfectly inelastic c) Inelastic d) Unit elastic
Answer: c) Inelastic -
Which of the following is an automatic stabilizer in an economy?
a) Central bank open market operations b) Government capital expenditure c) Unemployment benefits d) Import tariffs
Answer: c) Unemployment benefits -
The concept of derived demand applies to:
a) Consumer goods b) Luxury goods c) Factors of production d) Public goods
Answer: c) Factors of production -
Balance of payments equilibrium exists when:
a) Exports equal imports b) Total receipts from abroad equal total payments abroad c) The current account is in surplus d) The capital account is zero
Answer: b) Total receipts from abroad equal total payments abroad -
Economies of scale refer to:
a) Cost advantages gained as output increases b) The diseconomies arising from large-scale production c) The relationship between fixed and variable costs d) The minimum efficient scale of a firm
Answer: a) Cost advantages gained as output increases -
Which of the following is true of a Giffen good?
a) Demand falls as income rises b) Demand rises as price rises c) It has a negative cross elasticity d) It has perfectly elastic demand
Answer: b) Demand rises as price rises -
The Gini coefficient value of 0 represents:
a) Perfect inequality b) Moderate inequality c) Perfect equality d) Maximum poverty
Answer: c) Perfect equality -
Which of the following policies is contractionary fiscal policy?
a) Increasing government spending b) Reducing interest rates c) Increasing taxes d) Expanding money supply
Answer: c) Increasing taxes -
A natural monopoly arises when:
a) The government grants exclusive rights to one firm b) A single firm can supply the entire market at lower cost than multiple firms c) One firm buys out all competitors d) Foreign competition is eliminated by tariffs
Answer: b) A single firm can supply the entire market at lower cost than multiple firms -
Stagflation refers to a situation of:
a) High growth and high inflation b) High unemployment and falling prices c) Simultaneous high inflation and high unemployment d) Rapid economic development with stagnant wages
Answer: c) Simultaneous high inflation and high unemployment -
The infant industry argument is used to justify:
a) Free trade b) Export subsidies for large corporations c) Temporary protection of newly established domestic industries d) Permanent tariffs on all imports
Answer: c) Temporary protection of newly established domestic industries -
When a firm’s total fixed cost is ₦5,000 and it produces 500 units, average fixed cost is:
a) ₦25 b) ₦10 c) ₦50 d) ₦100
Answer: b) ₦10 -
The primary aim of ECOWAS is to:
a) Establish a common military force b) Promote economic integration and free trade among West African nations c) Regulate oil production in West Africa d) Provide loans to member states
Answer: b) Promote economic integration and free trade among West African nations -
Which of the following is a supply-side economic policy?
a) Increasing government welfare spending b) Reducing income tax to encourage work and investment c) Raising interest rates to curb inflation d) Expanding money supply to boost demand
Answer: b) Reducing income tax to encourage work and investment -
The velocity of circulation of money (V) in the quantity theory of money equation MV = PT refers to:
a) The speed at which new money is printed b) The number of times a unit of money changes hands in a given period c) The rate of inflation d) The ratio of money supply to national income
Answer: b) The number of times a unit of money changes hands in a given period
2022 IJMB economics paper 3
