Economics 2005 Jamb Examination
Question 1
The capital market is a long-term financing market where shares and bonds are traded. It needs regulation to protect investors, ensure transparency, and prevent fraud. In Nigeria, this responsibility rests with the Securities and Exchange Commission (SEC), not the Central Bank or the Stock Exchange itself.
The Stock Exchange only facilitates trading while the SEC sets and enforces rules. NDIC supervises deposit insurance and banks, not the capital market. Hence, the correct answer is B.
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Question 2
In the long run, the equilibrium point of a monopolistic firm is a point where the
demand curve is tangential to the average variable cost curve
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Question 3
The national income equilibrium is where total output equals aggregate demand (Y = C + I). Given C = 50 + 0.75Y and I = 45, the equation is:
\[ Y = (50 + 0.75Y) + 45 \]
\[ Y = 95 + 0.75Y \]
\[ Y - 0.75Y = 95 \]
\[ 0.25Y = 95 \]
\[ Y = 380 \]
Therefore, the equilibrium income is N380m. The correct option is A.
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Question 4
When the economy is already at or above full employment, extra demand stimulated by expansionary monetary policy cannot increase output further. Instead, the excess money supply raises prices, causing demand-pull inflation.
Aggregate supply is fixed at that point, so the adjustment happens through higher price levels. Therefore, the correct answer is C.
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Question 5
A major assumption in a perfectly competitive market is that
In perfect competition, there are many buyers and sellers such that no single participant can influence price. Each firm is a price taker, producing a homogeneous product.
Options A and D are wrong because the number of sellers is large and prices are not fixed by assumption but determined by demand and supply. Option C is a feature, but the defining assumption is that no individual can influence price.
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Question 6
A discount house is a market where
various bills are exchanged
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Question 7
Idle cash balances are held for
Idle cash balances refer to money kept aside without immediate investment or use. According to Keynes liquidity preference theory, one motive for holding money is the precautionary motive—cash set aside for emergencies or unforeseen circumstances.
This means idle balances are typically held for unplanned purchases rather than bonds or shares which involve active investment decisions.
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Question 8
In a particular year, the sum of the value added in each sector of the economy was N4550 million. The amount represents the GNP measured by the
Gross National Product (GNP) can be measured using three approaches: income, expenditure, and output. When the calculation involves summing the value added in each sector, this refers to the output (or product) approach, since it measures the total market value of goods and services produced.
The factor-cost method looks at incomes of factors, while expenditure focuses on spending. Here, the description matches the output approach.
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Question 9
Population density is described as the
Population density is defined as the ratio of the total population to the total land area of a country, usually expressed as people per square kilometre. It is a useful measure of how crowded or sparsely populated an area is.
It is not simply the total population, nor does it depend on migration figures directly.
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Question 10
In the short run, agricultural products have inelastic supply because output cannot be easily adjusted to changes in demand due to natural growth cycles and weather. When demand changes abruptly, prices fluctuate sharply because supply cannot respond immediately.
This explains why agricultural markets often experience price instability rather than stable or steadily rising/declining prices. Therefore, option D is correct.
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