Economics 2023 Jamb Examination

Expansionary monetary policy aims to increase the money supply and stimulate economic activity.
Buying Treasury securities injects liquidity into the banking system because commercial banks receive cash in exchange for the securities.
This increases banks’ capacity to lend, lowers interest rates, and encourages borrowing and investment.

Higher real interest rates increase the opportunity cost of holding money since money held earns no interest.
As interest rates rise, people prefer to hold less money and more interest-bearing assets.
This reduces both the transaction and speculative demand for money.

Cross elasticity of demand measures how the quantity demanded of one good responds to a change in the price of another.
For substitute goods, an increase in the price of one leads to an increase in demand for the other.
This positive relationship results in a positive cross elasticity value.

In macroeconomics, investment refers to additions to the stock of capital goods such as machinery, tools, buildings, and equipment.
These goods increase productive capacity and contribute to long-term economic growth.
It does not refer to financial investment in stocks or bonds.

The main economic agents are households, firms, and government because they participate directly in production, consumption, and distribution decisions.
The Central Bank is not classified as an economic agent; rather, it is an institution responsible for monetary policy and financial regulation.

Foreign aid is often criticised for encouraging the use of capital-intensive techniques unsuited for developing economies.
Such techniques reduce labour absorption and may worsen unemployment.
This creates dependency rather than fostering sustainable development.

Public corporations are state-owned enterprises created to provide essential services.
They are financed primarily through taxpayer funds allocated by the government.
This ensures public control and service provision even when profitability is low.

When quantity demanded does not change at all irrespective of price changes, demand is perfectly inelastic.
This is represented by a vertical demand curve, showing zero responsiveness to price changes.
Essential goods with no substitutes often exhibit this behaviour.

Higher real GDP increases economic activity, requiring more transactions.
This raises the transaction demand for money, and with a fixed money supply, interest rates rise due to higher demand for liquidity.
Thus both money demand and interest rates increase.

These workers have a job but are working fewer hours than they desire, making them underemployed.
Since they are employed, they are not counted as unemployed and therefore do not contribute to unemployment statistics.
Their status reflects labour underutilisation rather than unemployment.