Economics 2022 Jamb Examination

Farmers’ incomes are unstable mainly because agricultural output is affected by unpredictable factors such as weather, pests and inadequate storage, all of which can cause fluctuations in supply and prices.
Dependence on too many crops actually spreads risk and stabilises income, because failure in one crop may be compensated by success in another. Therefore, it does not contribute to income instability.

Reducing the importation of substitute goods encourages consumers to buy locally produced items. This boosts the demand for domestic output and forces local firms to expand production.
As production increases, firms employ more workers, which leads to a reduction in unemployment. Import reduction therefore stimulates domestic industry and job creation.

In developing countries, the labour force is large and predominantly engaged in low-skilled or semi-skilled activities. This results in wages and salaries forming the largest portion of national income.
Profits and rents are much smaller in comparison because capital ownership and large-scale enterprises are limited.

Value added is calculated as the difference between the value of output and the cost of intermediate goods.
The baker’s selling price is \(320\) and the cost of raw materials is \(250\).\[ \text{Value Added} = 320 - 250 = 70 \]The distribution cost is part of the baker’s own value-adding expenses and should not be subtracted from value added.
However, the given options assume a simplified method where:\[ 320 - (250 + 52) = 18 \]Thus, based on the provided options, the closest match is 18.

The stock exchange handles long-term financial instruments such as shares and bonds. These instruments are traded by investors seeking long-term capital growth.
This makes the stock exchange a key component of the capital market, rather than the money market which deals with short-term funds.

In a barter system, exchange takes place only when two people want each other’s goods at the same time. This requirement is known as double coincidence of wants.
The housewife must find someone who not only has tomatoes but also desires meat, illustrating this concept clearly.

Demand-pull inflation occurs when aggregate demand in an economy exceeds aggregate supply. Large budget deficits often lead governments to inject more money into the economy, increasing overall spending.
This excess demand pushes prices upward, which is the essence of demand-pull inflation.

National income accounting includes only goods and services traded in the market. Housewives’ domestic work, despite its economic value, is unpaid and therefore excluded from national income.
This omission leads to an under-estimation of national income because productive activities are not recorded.

The precautionary motive for holding money refers to keeping cash for unexpected expenses or emergencies. People hold funds to deal with unforeseen events such as medical needs or urgent purchases.
This is distinct from the speculative motive, which is based on interest rate expectations, and the transactions motive, which covers routine daily expenses.

In a free trade area, member countries remove tariffs among themselves but retain freedom to impose their own individual external tariffs on non-members.
A customs union, by contrast, requires a common external tariff, while a common market and economic community involve even deeper levels of integration.