JAMB Economics Previous Year Questions: 2020 | Economics for JAMB PDF Download

Q1: Scarcity in economics means?
(a) human wants are limitless
(b) the economy has very few resources
(c) the economy can scarcely produce anything
(d) resources are limited in relation to wants
Ans: (d)
Scarcity refers to the basic economic problem, the gap between limited – that is, scarce resources and theoretically limitless wants.
Any resource that has a non-zero cost to consume is scarce to some degree, but what matters in practice is relative scarcity.

Q2: Economics is often described as a social science because?
(a) laboratory experiments are performed
(b) It makes use of controlled experiments
(c) It uses scientific methods to explain an observed phenomenon and predict future events
(d) It makes use of fieldwork
Ans: (c)
Economics is regarded as a social science because it uses scientific methods to build theories that can help explain the behaviour of individuals, groups and organisations.
Economics attempts to explain economic behaviour, which arises when scarce resources are exchanged.

Q3: Which of the following is an example of an invisible item on the balance of payments account
(a) shipping and aviation
(b) exports and imports
(c) merchandise
(d) Bullion
Ans: (a)
Invisible balance of payments refers to services or products that do not result in the transfer of physical objects.
Examples of invisible balance are tourism, consulting services, and shipping services

Q4: A major factor affecting the value of money is the?
(a) price level
(b) banking habits
(c) transaction motive
(d) divisible nature of money
Ans: (a)
Price level is a major factor because a rise or decline in the prices of goods and services has a direct effect on the value of money.

Q5: The Nigerian bank for commerce and industry is?
(a) a commercial bank
(b) a development bank
(c) an industrial bank
(d) a merchant bank
Ans: (b)
A development finance institution, also known as a development bank or development finance company, is a financial institution that provides risk capital for economic development projects on a noncommercial basis.
Development banks provide medium and long-term finance to the industrial and agricultural sectors. The Nigerian bank for commerce and industry is a good example of a development bank.

Q6: To control inflation, the monetary authorities of a country can
(a) reduce taxes
(b) advise the government to increase its expenditure
(c) engage in expansive monetary policies
(d) engage in restrictive monetary policies
Ans: (d)
Restrictive monetary policy is also known as contractionary monetary policy. A contractionary monetary policy is a type of monetary policy that is intended to reduce the rate of monetary expansion to fight inflation. The policy reduces the money supply in the economy to prevent excessive speculation and unsustainable capital investment.

Q7: Which of the following is used by the central bank to control the rate of interest
(a) bill of exchange
(b) banker's order
(c) fixed deposit account
(d) open market operation
Ans: (d)
Open market operations refer to central bank purchases or sales of government securities in order to expand or contract money in the banking system and influence interest rates.

Q8: What form of market is found in an imperfect competition where there are few buyers and many sellers
(a) monopoly
(b) oligopoly
(c) duopoly
(d) oligopsony
Ans: (d)
An oligopsony is a situation when there are only a small number of buyers in a market. As a result of the small number of buyers, limited number of people have market power and are able to lower the price they pay for a good or service due to the lack of competition.

Q9: A budget with a projected revenue in excess of its expenditure is said to be?
(a) balanced
(b) surplus
(c) deficit
(d) inflationary
Ans: (b)
A surplus budget is a budget whose revenues exceed the estimated expenditure in a particular financial year.

Q10: In order to raise more revenue for a certain period, the government should impose higher taxes on goods whose demands are___
(a) elastic
(b) inelastic
(c) perfectly elastic
(d) unitary elastic
Ans: (b)
The reason the government can impose more taxes in inelastic is because  the buyer's demand does not change as much as the price changes.
This means that an increase in price of such goods as a result of high taxes or other factors does not cause a significant change in the demand.

Q11: If aggregate income is N500.00 and aggregate consumption is N400.00, this means that the average propensity to consume is?
(a) 0.20
(b) 0.80
(c) 1.25
(d) 2.00
Ans: (b)
Average Propensity to Consume (APC) is a measure of the percentage of income that is spent rather than saved.
APC = C / DI
Income = 500
consumption = 400
400/500 = 0.8

Q12: The group of unemployed members of a community who are physically handicapped or disable, is generally classified under unemployment as?
(a) frictional
(b) cyclical
(c) residual
(d) hidden
Ans: (b)
Cyclical unemployment is the component of overall unemployment that results directly from cycles of economic upturn and downturn.
Unemployment typically rises during recessions and declines during economic expansions.

Q13: Collectivism refers to the management of state enterprises in a?
(a) mixed economy
(b) co-operative organizations
(c) capitalist economic system
(d) socialist economy
Ans: (d)
Collectivism refers to the management of state enterprises in a socialist economy, where the means of production are owned and controlled by the state or the collective as a whole. In such an economic system, the state takes a central role in planning and directing economic activities.

Q14: Efficiency in production means?
(a) reducing the size of the work force
(b) producing a given output with the lowest cost of combination of factors of production
(c) adoption of capital intensive technology
(d) increasing the quantity of the fixed factors of production
Ans: (b)
Efficiency in production means achieving the highest possible output with the lowest cost of using the factors of production, such as labor, capital, and resources. It involves minimizing wastage, improving productivity, and optimizing the allocation of resources to maximize output while minimizing costs.

Q15: In economic life, the choice among alternatives depends on the?
(a) income of the decision maker
(b) scarcity of resources
(c) the scale of preference of the decision-maker
(d) status of the decison maker
Ans: (c)
In economic life, the choice among alternatives depends on the individual's scale of preference, which represents their personal ranking of the available options based on their preferences and needs. It reflects the relative importance and satisfaction derived from different choices and helps individuals make decisions that maximize their utility or satisfaction.

Q16: The law of diminishing marginal utility indicates that if a consumer increases his consumption of a commodity continously
(a) total utility must fall
(b) marginal utility must fall
(c) marginal utility may rise
(d) marginal utility may fall even though his total utility may be rising
Ans: (b)
The law of diminishing marginal utility states that as a consumer increases their consumption of a commodity continuously, the additional satisfaction or utility derived from each additional unit consumed will eventually diminish. In other words, the marginal utility, which is the utility derived from consuming one additional unit, will decrease with each additional unit consumed.

Q17: Which of the following rewards is associated with entrepreneurship
(a) salaries
(b) profits
(c) interest
(d) rent
Ans: (b)
Entrepreneurship is associated with the expectation of earning profits. Entrepreneurs take risks and organize resources to start and operate businesses with the goal of generating profits. They invest their time, effort, and capital into innovative ideas and ventures, hoping to create value and be rewarded with financial returns in the form of profits.

Q18: Which of the following is likely to be inflationary
(a) taxes increase
(b) increase in unemployment
(c) budget surplus
(d) wages increase
Ans: (d)
An increase in wages is likely to be inflationary. When wages increase, it raises the production costs for businesses. To maintain their profit margins, businesses may pass on these increased costs to consumers in the form of higher prices for goods and services, leading to inflationary pressures in the economy.

Q19: The relationship between the tax rate and income which is relevant to progressive tax is shown by?
(a) curve X
(b) curve Y
(c) curve Z
(d) curve X and Z
Ans: (b)
The relationship between the tax rate and income that is relevant to progressive tax is shown by curve Y. In a progressive tax system, the tax rate increases as income rises. Curve Y represents the upward-sloping relationship between the tax rate and income, indicating the progressive nature of the tax system.

Q20: The relationship between tax rate and income which is relevant to a proportional tax is depicted by?
(a) curve Z and Y
(b) curve X
(c) curve Z
(d) curve Y
Ans: (c)
The relationship between the tax rate and income that is relevant to a proportional tax is depicted by curve Z. In a proportional tax system, the tax rate remains constant regardless of the level of income. Curve Z represents a flat line, indicating a constant tax rate regardless of income.

Q21: Fiduciary issue is that part of?
(a) the issue of notes backed entirely by gold
(b) a country's currency that is not negotiable
(c) the issue of notes not backed by gold
(d) a country's currency officially issued
Ans: (c)
Fiduciary issue refers to the issuance of currency or notes that are not backed by gold or any specific physical reserve. Instead, the value of the currency is based on the trust or confidence placed in the issuing authority, typically a central bank or government.

Q22: The type of business finances that entitles the holder to a fixed rate of dividend is?
(a) preference stock
(b) common stock
(c) debentures
(d) bank loan
Ans: (c)
Debentures are a type of business financing that entitles the holder to a fixed rate of dividend. They represent long-term debt instruments issued by companies to raise capital. Debenture holders are creditors of the company and have a claim on the company's assets and earnings, receiving fixed interest payments (dividends) periodically.

Q23: A company's expenditure on raw materials is regarded as?
(a) explicit cost
(b) implicit cost
(c) prime cost
(d) average cost
Ans: (a)
A company's expenditure on raw materials is regarded as an explicit cost. Explicit costs are direct, out-of-pocket expenses incurred by a firm in its production process, such as payments for labor, raw materials, rent, utilities, and other inputs. These costs are easily quantifiable and recorded in the firm's accounting statements.

Q24: Firms are often set up close to each other in order to take advantage of?
(a) supply of skilled labour
(b) agglomeration economies
(c) internal economies of scale
(d) external economies of scale
Ans: (d)
Firms are often set up close to each other in order to take advantage of external economies of scale. External economies of scale refer to the cost advantages that arise from the concentration of firms in a particular geographic area. By locating near each other, firms can benefit from shared infrastructure, specialized labor markets, knowledge spillovers, and easier access to suppliers and customers, leading to cost savings and increased productivity.

Q25: A situation in which a commodity is sold abroad below its cost of production in the home country is known as?
(a) dumping
(b) counter trade
(c) bilateral trade
(d) trade liberalization
Ans: (a)
Dumping refers to the practice of selling a commodity abroad at a price below its cost of production in the home country. This is often done to gain a competitive advantage in the foreign market by flooding it with low-priced goods. Dumping can have adverse effects on domestic industries and can be subject to trade remedies and regulations.

Q26: The problem of conducting census include
(a) high rate of rural-urban migration
(b) poor geographical distribution of population
(c) high birth rate in the country
(d) poor town planning in urban areas
Ans: (d)
The problem of conducting a census can include poor town planning in urban areas. This can lead to challenges in accurately counting and locating individuals and households during the census process. Poor town planning can result in informal settlements, inadequate infrastructure, and difficulties in accessing certain areas, making it challenging for census enumerators to collect accurate data.

Q27: The factor of production that has the highest degree of mobility is?
(a) land
(b) labour
(c) capital
(d) entrepreneur
Ans: (b)
Labor has the highest degree of mobility among the factors of production. Unlike land, which is fixed in location, and capital, which may require significant costs to relocate, labor can move more easily in response to changes in demand and opportunities. Labor mobility allows workers to seek employment in different regions, industries, or occupations based on market conditions and individual preferences.

Q28: In recent times, agriculture in Nigeria tends to lose its vital labour force as a result of?
(a) lack of an effective agricultural policy
(b) employment opportunities in the agricultural sector
(c) rural-urban drift
(d) low prices of agricultural products
Ans: (c)
In recent times, agriculture in Nigeria tends to lose its vital labor force as a result of rural-urban drift. Rural-urban drift refers to the migration of people from rural areas to urban areas in search of better economic opportunities, higher wages, improved living standards, and access to social amenities. As more people leave rural areas for urban centers, the agricultural sector may face a shortage of skilled labor, affecting productivity and rural development.

Q29: The most important goal of OPEC is to?
(a) present a united front for the purpose of raise prices of crude oil
(b) bring unity among the petroleum exporting countries
(c) ensure political stability among member states
(d) ensure that rules on quota production are strictly followed
Ans: (d)
The most important goal of OPEC (Organization of the Petroleum Exporting Countries) is to ensure that rules on quota production are strictly followed. OPEC is a cartel of oil-producing countries that aims to coordinate and stabilize oil prices in the international market. It sets production quotas for member countries to manage oil supply and influence prices.

Q30: Plywood industries are often located near the source of?
(a) finance
(b) labour
(c) power supply
(d) raw materials
Ans: (d)
Plywood industries are often located near the source of raw materials. Raw materials, such as timber or wood, are essential inputs in the production of plywood. By locating near the source of raw materials, plywood industries can reduce transportation costs, ensure a steady supply of inputs, and minimize potential disruptions in production.

Q31: When a country's population is experiencing increasing returns, that country is said to be?
(a) overpopulated
(b) economically poor
(c) over-producing goods and services
(d) under-populated
Ans: (d)
When a country's population is experiencing increasing returns, that country is said to be under-populated. Increasing returns refer to a situation where an increase in the quantity or scale of inputs leads to a more than proportional increase in output. Under-population implies that there is an abundance of resources relative to the size of the population, creating favorable conditions for economic growth and development.

Q32: The most important attribute of money is?
(a) homogeneity
(b) relative scarcity
(c) divisibility
(d) general acceptance
Ans: (d)
The most important attribute of money is general acceptance. Money serves as a widely accepted medium of exchange for goods and services. It is a universally recognized and trusted form of payment that facilitates economic transactions, simplifies the exchange process, and acts as a store of value and unit of account.

Q33: The use of legally permissible means to reduce tax liabilities is known as tax?
(a) evasion
(b) avoidance
(c) relief
(d) exemption
Ans: (b)
The use of legally permissible means to reduce tax liabilities is known as tax avoidance. Tax avoidance involves structuring financial affairs in a way that minimizes tax obligations without violating tax laws. It often involves taking advantage of tax deductions, credits, loopholes, and incentives to legally reduce taxable income or tax liability.

Q34: The Economic Commission for Africa was set up by the?
(a) UNO
(b) ECOWAS
(c) OAU
(d) IMF
Ans: (a)
The Economic Commission for Africa (ECA) was set up by the United Nations to promote economic development and cooperation among African countries. It provides research, policy advice, and technical assistance to support sustainable economic growth, regional integration, and poverty reduction in Africa.

Q35: One of the techniques of monetary control used by the central bank of Nigeria is
(a) selective credit control
(b) budget deficit
(c) foreign exchange control
(d) monitoring the general price level
Ans: (a)
One of the techniques of monetary control used by the central bank of Nigeria is selective credit control. Selective credit control refers to the central bank's authority to regulate and direct the flow of credit to specific sectors or activities of the economy. It involves setting credit limits, interest rates, and reserve requirements for banks and financial institutions to manage inflation, control money supply, and promote stability in the financial system.

Q36: Crude petroleum is a good example of a
(a) lasting asset
(b) wasting asset
(c) synthetic product
(d) costless resources
Ans: (b)
Crude petroleum is a good example of a wasting asset. A wasting asset is one that is depleted or used up over time. Crude petroleum is a finite resource that is extracted from the ground and eventually depleted through production and consumption. As it is extracted, the available reserves diminish, making it a wasting asset.

Q37: A major effect of a long distribution chain is
(a) scarcity of commodities
(b) high retail
(c) low retails prices
(d) low producer earnings
Ans: (a)
A major effect of a long distribution chain is the scarcity of commodities. A long distribution chain involves multiple intermediaries and stages between the producer and the final consumer. This can lead to delays, inefficiencies, increased costs, and a longer time for products to reach the market. These factors can contribute to shortages or scarcity of commodities, especially if there are disruptions or bottlenecks in the distribution process.

Q38: One of the major criticism of the 1962 -1968 National Development Plan was that?
(a) it failed to incorporate lessons gained from earlier plans to enhance its efficiency
(b) it came too quickly after the country's independence
(c) planned expenditure was based too heavily on expected earnings from crude oil
(d) its execution was based largely on foregn-sourced financial resources
Ans: (c)
One of the major criticisms of the 1962-1968 National Development Plan was that planned expenditure was based too heavily on expected earnings from crude oil. The plan relied heavily on projected revenues from oil exports, assuming a sustained and significant increase in oil prices. However, the volatile nature of oil prices and the dependence on a single revenue source exposed the plan to risks and uncertainties, and it was criticized for not diversifying revenue streams and considering alternative sources of funding.

Q39: Utility is the satisfaction derived from?
(a) production
(b) distribution
(c) consumption
(d) demand
Ans: (c)
Utility is the satisfaction derived from consumption. It represents the level of satisfaction, usefulness, or value that individuals derive from consuming goods and services. Utility is subjective and varies from person to person, depending on their preferences, needs, and tastes. Consumption allows individuals to fulfill their wants and needs, thereby providing utility or satisfaction.

Q40: Economic growth is different from economic development because economic growth
(a) describes expansion and changes
(b) is measurable but not objective
(c) describes expansion and not change
(d) is not measurable but objective
Ans: (c)
Economic growth is different from economic development because economic growth describes expansion and not change. Economic growth refers to an increase in the quantity of goods and services produced in an economy over time. It is typically measured by changes in the Gross Domestic Product (GDP) or national income. Economic development, on the other hand, encompasses a broader concept that includes improvements in the quality of life, well-being, and standards of living for individuals and societies. It involves social, political, and institutional changes, as well as economic growth, to create sustainable development.