Economics 2021 Past Questions | WAEC
Use this data below to answer the question
The following data relates to the national income of a country.
Gross domestic product = $2800
Net factor income from abroad = $250
Depreciation = $700
Indirect taxes = $120
31. What is the country’s Gross National (GNP)?
- A. $ 3.050
- B. $ 2.680
- C. $ 2,350
- D. $2,100
Correct Option: Answer is A
- GNP = C + I + G + X + Z
- Where C is Consumption, I is investment, G is government, X is net exports, and Z is net income earned by domestic residents from overseas investments minus net income earned by foreign residents from domestic investments
- GNP = GDP + Net income
- GNP = 2800 + 250 = $3050
Use this data below to answer the question
The following data relates to the national income of a country.
Gross domestic product = $2800
Net factor income from abroad = $250
Depreciation = $700
Indirect taxes = $120
32. What is the country’s Net National Product (NNP) at factor cost?
- A. $3.050
- B. $2,680
- C. $2,230
- D. $2.220
Correct Option: Answer is B
- NNP=Gross National Product−Depreciation
- Net national product (NNP) is calculated by taking GNP and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year. The process by which capital ages and loses value is called depreciation
- NNP = GDP + Net income – Depreciation
- NNP = 2800 + 250 – 700 = $2350
33. The standard of living in two countries can be compared using the___________
- A. number of industries in each country
- B. size of their arms and ammunition
- C. size of their national incomes only
- D. gross national product per head
Correct Option: Answer is D
34. Government can curb inflation by_________
- A. encouraging banks to lend for any purpose.
- B. increasing her own expenditure.
- C. buying treasury bills in the open market.
- D. selling securities in the open market
Correct Option: Answer is C
- Reverse repurchase agreements are an example of open market operations (OMOs), which refers to the buying and selling of Treasury securities. OMOs are a tool with which the Federal Reserve increases (by buying Treasuries) or decreases (by selling Treasuries) the money supply and adjusts interest rates.
35. Functions of money does not include_______
- A. store of value.
- B. medium of exchange
- C. standard of deferred payment.
- D. general acceptability.
Correct Option: Answer is C
The following are some of the functions of money
- Money as the Medium of Exchange
- Money as a Store of Value
- Money as a Measure of Value
- Money as the Standard of Deferred Payment
- Its basic characteristic is general acceptability, not a function
36. Demand-pull inflation can be as a result of___________
- A. increase in the cost of production.
- A. deficit financing by the government.
- B. excessive supply of foodstuff
- D. increase in import duties.
Correct Option: Answer is A
- An increase in the costs of raw materials or labor can contribute to cost-pull inflation. Demand-pull inflation can be caused by an expanding economy, increased government spending, or overseas growth.
37. An increase in cash ratio by the central bank will_______
- A. Increase the supply of money.
- B. Increase banks lending
- C. Encourage borrowing.
- D. Reduce the supply of money.
Correct Option: Answer is D
- If there is an increase in the cash reserve ratio, a bank will a low lending capacity in terms of funds. Hence, banks will ask more people to open deposits in their bank accounts. Banks will also raise the interest rate and this step will discourage borrowers from applying for loans due to the increased interest rate.
38. When a government cuts down her expenditure to reduce inflation, she has embarked on___________
- A. A restrictive Fiscal policy.
- B. An expansionary monetary policy.
- C. Physical policy.
- D. Implementing budget deficit
Correct Option: Answer is A
- A tight, or restrictive fiscal policy includes raising taxes and cutting back on federal spending. A loose or expansionary fiscal policy is just the opposite and is used to encourage economic growth.
39. In order to enable the government of a country to increase its tax revenue, it will be advisable for it to increase taxes on_______
- A. Textile materials with elastic demand
- B. Alcoholic beverages with inelastic demand
- C. Agricultural products with inelastic supply
- D. Luxury goods with elastic supply
Correct Option: Answer is B
- If demand is inelastic, a higher tax will cause only a small fall in demand. Most of the tax will be passed onto consumers. When demand is inelastic, governments will see a significant increase in their tax revenue.
40. People who dispose of their assets are expected to pay ______________
- A. value added tax
- B. capital gains tax
- C. expenditure tax
- D. sales tax
Correct Option: Answer is B
- Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.
41. A floating exchange rate means that the exchange rate is fixed by the __________
- A. Central bank of the country
- B. Forces of demand and supply
- C. International monetary fund (IMF)
- D. Ministry of Finance
Correct Option: Answer is A
42. A measure that can be adopted to correct a country ‘s balance of payments deficit is ____________
- A. Allow the currency to appreciate to encourage imports.
- B. Allow the currency to depreciate to encourage imports
- C. Adopt import substitution strategy
- D. Restrict trade with all countries
Correct Option: Answer is C
43. Records of a country’s invisible trade are recorded in her_____________-
- A. Trade account.
- B. Capital account.
- C. Current account
- D. Financial account.
Correct Option: Answer is C
44. If a country’s import bill is high, she can encourage exports by___________
- A. Allowing her currency to depreciate
- B. Allowing her currency to appreciate
- C. Liberalizing importation
- D. Increasing taxes on all locally produced goods
Correct Option: Answer is C
45. If a country imposes a barrier on trade, the resultant effect will be _________
- A. a halt in buying and selling
- B. high quality goods from local industries
- C. an increase in the demand for locally produced goods
- D. shutdown of infant industries