Economics 2015 Jamb Examination

A subsidiary industry is one that develops to provide goods or services required by a larger or parent industry.
It supports the main industry's operations, such as component suppliers for automobile manufacturers.
This interdependence allows both industries to grow together, fostering economic development.

A rightward shift of the budget line, as seen from JK to GH, indicates that the consumer can now afford more of both goods.
This shift can result either from an increase in income or a fall in the prices of both goods.
Since the slope remains the same, it implies the relative prices of A and B are unchanged, confirming that both prices have fallen equally, increasing real purchasing power.

A deficit budget occurs when government expenditure exceeds its revenue within a fiscal year.
This situation often leads to borrowing or printing of money to finance the gap.
It is commonly used during economic downturns to stimulate growth but can increase national debt if not managed properly.

The supply of money refers to the total quantity of money — including cash, deposits, and other liquid instruments — available in an economy at a given time.
It represents the funds that households and firms can use for transactions, savings, and investment purposes.

The accelerator principle explains the relationship between changes in income and investment.
It states that an increase in national income encourages firms to invest more in capital goods to meet higher demand.
Therefore, investment depends on the rate of change of income rather than its absolute level.

Mass production requires a large and stable market to absorb the high volume of goods produced.
If the market size is small, firms cannot sell all their output, leading to inefficiency and wasted resources.
Therefore, the small size of the market limits the scale and viability of mass production.

A perfectly inelastic demand curve indicates that quantity demanded does not change regardless of price variations.
Graphically, this is shown as a vertical demand curve, meaning elasticity equals zero.
Essential goods such as life-saving drugs often exhibit this type of demand.

The terms of trade measure the rate at which a country's exports exchange for imports.
It is calculated using the formula:\[ \text{Terms of Trade} \]\[= \left( \dfrac{\text{Price Index of Exports}}{\text{Price Index of Imports}} \right) \times 100 \]A higher value indicates that a nation can import more goods for a given level of exports, signifying favourable trade conditions.

The Marginal Propensity to Consume (MPC) is given by:\[ MPC = \dfrac{\Delta C}{\Delta Y} \]Where \( \Delta C = 150 - 100 = 50 \) and \( \Delta Y = 250 - 150 = 100 \).
Therefore,\[ MPC = \dfrac{50}{100} = 0.5 \]This means that for every additional ₦1 earned, the individual spends ₦0.50 on consumption.

Macroeconomics focuses on the behaviour of the economy as a whole rather than on individual markets.
It deals with aggregate variables such as national income, inflation, unemployment, and overall growth.
This field contrasts with microeconomics, which studies the behaviour of individual firms and households.