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ECONOMICS EXAM QUESTIONS FOR SS2 THIRD
TERM
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SS2 ECONOMICS EXAM QUESTIONS THIRD TERM

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THIRD TERM EXAMINATION
Examination malpractices may lead to a repeat of the subject or suspensions don’t be involved.   
Subject: ECONOMICS                         
Class: SS 2
DURATION ; 2Hrs
1. Economics is regarded as a science because it (a) studies laws that governs human
behaviors  (b) uses scientific method to explain human behavior (c) makes use of
controlled experiments to explain human behavior (d) makes use of machines to study
human behavior

2. Government revenue will increase if taxes are levied on goods with (a)  perfectly elastic
demand  (b) fairly elastic demand (c) perfectly inelastic demand (d) unitary elastic
demand

3. All the following are methods of determining prices except (a)maximum pricing (b)
rationing (c) minimum pricing (d) auctioning

4. When the demand for foreign exchange exceeds its supply, the value of the domestic
currency  (a) appreciates (b) depreciates (c) remains unchanged (d) expands
5. General rise in the price level induced by increased price of inputs is referred to as (a)
run-away inflation (b) cost-push inflation (c) demand-pull inflation (d) imported inflation

6. A  budget is balanced when expected total revenue is  (a) greater than expected
expenditure (b) less than total expenditure (c) equal to total expenditure (d) greater than
total expenditure

7. The value of money is affected by the  (a) speculative motive (b) price level (c)
precautionary motive (d)intervention of development banks

8. The difference between the Gross Domestic Product (GDP) and Gross National Product
(GNP) is (a) depreciation (b) transfer payment (c) net income from abroad (d) direct
taxes

9. In National Income accounting ,the  term Net is used to indicate that a value (a) includes
incomes of foreigners (b) excludes incomer of citizens (c) includes depreciation (d)
excludes depreciation

10. The main item traded on a Stock Exchange Market is  (a) treasury bills (b) travellers’
cheques (c) foreign currencies (d) new shares 

11. Precautionary motive for holding money is to (a) meet daily and regular transactions (b)
take advantage of changes in the prices of goods and services (c) cover unforeseen
events (d) cover expenses on house rent

12. The proportion of commercial banks’ total assets kept in the form of highly liquid Assets
is known as (a) demand deposit (b) fixed deposit (c) cash ratio (d) moral suasion

13. In order to control inflation ,the government should  (a) reduce the cost of borrowing (b)
buy securities in the open market (c) adopt restrictive monetary policy (d) discourage
savings.

14. Disposable income is the income earned  (a) by the nationals of a country resident within
the country (b) from productive activities of nationals of a country both at home and
abroad  (c) when personal income tax is deducted from personal income (d) when the
gross income of an individual is added to person income tax

15. Which of the following is not a recurrent expenditure? (a) building of schools and
colleges (b) maintenance of school buildings (c) payment of teachers’ salaries (d)
purchase of stationary for examinations
16. A situation in which the estimated government revenue is less than the proposed
expenditure for a given year can be described as  (a) surplus budgeting (b)
supplementary budgeting (c) balance budgeting (d) deficit budgeting

17. Which of the following best defines inflation? (a) cyclical increase in prices (b) periodic
increase in prices (c) persistent increase in prices (d) occasional increase in prices

18. Which of the following functions of money is mostly affected during inflation? (a)
medium of exchange (b) unit of account (c) store of value (d) standard of deferred
payment

19. Which of the following cannot be described as Land? (a) Forest (b) diamond (c) roads (d)
crude oil.  

20. Why would an individual increase his level of consumption during inflationary period? (a)
the real value of any amount saved falls overtime (b) interest rate are generally low (c)
there are varieties of goods to buy (d) wages and salaries stagnates during inflation

21. National Income is used to measure (a) a country’s population size (b) a country’s
economic growth (c) the human level of development (d) the flow of imports to a
country.

22.  Scarcity implies that (a) goods cannot be produced efficiently (b) human wants are
unlimited (c) goods and services are limited (d) commodities are evenly distributed
within the economy.

23.  Mono-product economics are those that produce (a) only international products (b)
petroleum products (c) agricultural  products (d) one main commodity

24. The profit of a producer is the difference between  (a) total cost and margin cost (b) total
revenue and total cost (c) average cost and total cost (d) price and total cost

25. Money will serve as a standard of deferred payment if it is  (a) homogeneous (b) durable
(c) easily recognized (d) stable in value

26. The National income is the  (a) Gross Domestic Product at market prices (b) Gross
National Product at factor cost (c) Net National product at factor cost (d) Net National
Product at market prices

27. When depreciation is deducted from Gross National Product, the result is (a) total
national income (b) gross domestic product (c) net national product (d) net domestic
product
28. Human wants are unlimited because   (A) Production is inadequate  (B) resources have
alternative uses  (C) new wants always arise  (D) resources are limited

29. The demand for money is  described as a (a) competitive demand (b) joint demand (c)
derived demand (d) composite demand

30. Which of the following is involved in the money market? (a) building society (b)
development banks (c) commercial banks (d) stock exchange

31. Demand pull inflation can aptly be described as a (a) inflation induced by rising costs of
production of production (b) reduction in government expenditure (c) persistent rise in
prices due to increase in expenditure (d) massive importation of goods from a country
with hyperinflation

32. A basic economic problem of any society is  (A) High level of illiteracy  (B) irregular power
supply  (C) population growth  (D) resource allocation

33. State owned enterprises are more common in   (A)  centrally planned economies  (B)
mixed economies  (C) capitalist economies  (D) developed economies

34. A normal supply curve has a positive slope which indicates that  (A) sellers are willing to
sell more at a lower price  (B) sellers are indifferent to price  (C) sellers are willing to sell
more at a higher price  (D) there is always a fixed supply

35. In a centrally planned economy, what to produce is  (A) determined by the forces of
demand and supply.  (B) Driven by profit motive.  (C) Determined by consumers.  (D) the
responsibility of state’s bureaucrats

36. Which of the following is related to resource allocation in an economy?  (A) How to
produce  (B) What to produce  (C) For whom to produce (D) Efficient use of inputs

37. Which of the following is not a feature of socialism?  (A) Collective ownership of
productive resources   (B) Freedom of enterprise  (C) Production is not based on the
profit motive  (D) Maximization of public welfare

38. Households make economic decisions because they want to  (A) make more profit   (B)
increase their salaries and wages  (C) increase their purchases  (D) maximize their
satisfaction

39. Which of the following functions of money is mostly affected during inflation?  (A)
Medium of exchange  (B) Unit of Account  (C) Store of value  (D) Standard of deferred
payment
40. A shift in the demand curve indicates  (A) exceptional demand  (B) change in demand  (C)
change in quantity demanded  (D) elasticity of demand

41. Precautionary motive for holding money is to  (A) meet daily and regular transactions  (B)
take advantage of changes in the prices of goods and services  (C) cover unforeseen
events  (D) cover expenses on house rent

42. Which of the following measures will not encourage industrialization in West Africa?  (A)
Taking over of all forms of industries by the government (B) Provision of social
infrastructure  (C) Giving tax incentives, especially to infant industries  (D) Using tariffs to
discourage the use of imported items.

43. Goods which have to be paid for are known as  (A) physical goods  (B) economic goods 
(C) free goods  (D) intangible goods.

44. If a 6% decrease in price results in more than 6% decrease in quantity supplied, supply
can be regarded as  (A) elastic  (B) unitary elastic  (C) Perfectly inelastic           (D) perfectly
elastic

45. A condition for consumer utility maximization is  (A) equality of the ratio of marginal
utilities and ration of prices.  (B) equality of the ratio of average utilities and the ratio of
prices  (C) equality of the marginal utility to total utility ratio for both commodities  (D)
total utility and marginal utility must be Zero

46. Which of the following best describes the mode?  The (A) observation with the highest
frequency  (B) average of two middle numbers  (C) item that occupies the middle
position  (D) difference of two extreme values

47. Given the demand function; Qd = 20 – 1/2 p.  What is Qd, when p is $12?.  (A) 6 units  (B)
10 units  (C) 12 units  (D) 14 units

48. Households make economic decisions because they want to  (A)  make more profit  (B)
Increase their salaries and wages  (C) increase their purchases  (D) maximize their
satisfaction

49. A normal supply curve has a positive slope which indicates that  (A) sellers are willing to
sell more at a lower price  (B) sellers are indifferent to prices  (C) sellers are willing to sell
more at a higher price  (D) there is always a fixed supply.
 50. The components of a three-sector economy are  (A) banks, Schools and hospitals  (B)
workers, producers and marketers  (C) households, firms and the government  (D)
producers, retailers and wholesalers

SS2 ECONOMICS EXAM QUESTIONS THIRD TERM – EDUDELIGHT.COM

ECONOMICS 2 THEORY QUESTIONS
ESSAY-SECTION A
Answer one question only from this section
 The following data shows the budget of a hypothetical country in 2006. Study the data
and answer the questions that follow.

Revenue {$ Millions}

Company tax 240

Workers’ income tax 160

Excise duties 80

Taxes on exports 100

Value added tax 150

Import duties 90

Non – tax revenue 40

Expenditure {$ Millions}

Construction of road 100

Building of schools 120

Payment of workers’ salaries 150

Government administration 200

 Maintenance of health facilities 220

Extension of electricity to rural areas 180

Maintenance of official vehicles 70

 How many revenue was realized from?

 Direct tax

 Indirect tax

  Calculate the total:

 Recurrent expenditure

 Capital expenditure

 What percentage of total revenue was collected as indirect tax?

 State two examples of non-tax revenue

 What was the budget surplus of deficit? Explain your answer.

  The table below shows the incomes and rates of income tax levied on four professionals
in an economy.

Tax
Income Per Disposable
Profession rate
Month($) income ($)
(%)

Doctor 8,000 10  

Engineer 7,000 12  

Civil
5,000 18  
Servant

Nurse 6,000 15  

Use the above data to answer the questions that follows

  Calculate the disposable incomes of the four individuals. (b) what system of taxation was
employed ? (c) Give reasons for your answers in 2(b).

(d) with the aid of a diagram, explain the system of taxation employed in 2(b).

SECTION B
Answer two questions only from this section.
3          a. what is a tax?

b. Briefly outline the principles of taxation and give reasons why Nigerians are taxed.   

c. Explain each of the following types of taxes ; (i) Proportional tax (ii) Progressive tax (iii)
Regressive tax

d. outline the difficulties encountered by tax collectors in Nigeria.

4          (a) Explain the functions of Stock Exchange.

(b) Write short note on the following: (i) The money Market (ii) the capital market

(c)        What is meant by National Income?

What are the problems involved in the measurement of National Income

(d)       Write short note on the following (i) Gross National Product [GNP] (ii) Gross Domestic
Product [GDP] (iii) Net National Product [NNP] (iv) Per Capita Income (iv) Disposable Income

            v. Open inflation

5          (a) what is meant by Demand for money?

            (b) What are the motives behind the demand for money?

            (c) What is meant by the value of money?

            (d) What factors bring about the changes in the value of money?

6          (a) what is inflation? And how does it affect the value of money?

            (b) What are the positive and negative effects of inflation on an economy?

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            (c) Write notes on the following

            i. Demand-pull inflation

            ii. Disinflation

            iii. Cost-pull inflation

            iv. Reflation

SS2 ECONOMICS EXAM QUESTIONS THIRD TERM – EDUDELIGHT.COM

ECONOMICS

SECTION B
Answer one question only from this section
1a.       The demand function for a commondity is given as Qd = 21 – 3p.  Use the             demand
function to complete the table below –

Price =N= 0 1 3 4 5 6

Quantity demanded (kg)            

b.         Draw the demand curve for the completed schedule in 1(a)

c.         Outline any three factors affecting demand

2.         The table below shows the budgetary allocation of a country to selected   sectors of the
economy in a particular year.  Study the table carefully and          answer the questions that follow.

                                                Sectors                        Amount ($million)

                                    ___________________________________________

                                                Education                                            6,250

                                                Mining                                     2.150

                                                Agriculture                                          4,300

                                                Communications                                 2,400

                                                Health                                     2,900

a.         Present the above information contained in the table in the form of a pie chart

b.         Distinguish between a budget surplus and a budget deficit

SECTION C
Answer three questions only from this section
3a.       What is supply?

3b.       Describe only five determinants of supply

4a.       Define the term Limited Liability

  b.       Explain four problems of statutory public corporations in your country

5a.       What is market?

  b.       Explain the main features of a perfectly competitive market

6a.       Explain the following systems of agriculture as practised in your country.

ECONOMICS

1. Suppose that the equilibrium price of an article is N5.00 but the government fixes the price by law
at N4.00, the supply will be

A. The same as equilibrium supply

B. Greater than equilibrium supply

C. Less than the equilibrium supply

D. Determined later by government

E. None of these

2. A budget deficit means

A. That a country is buying more than is selling

B. That a country is selling more than is buying

C. That a government is spending more than in takes in taxation

D. That a government is spending less than it takes in taxation

E. That a government is spending as much as it takes in taxation

3. When elasticity is zero, the demand curve is

A. Perfectly elastic

B. Perfectly inelastic

C. Concave

D. Downward slopping

E. Circular

4.The following is NOT a reason for the existence of small firms

A. Scale of production is limited by size of the market

B. Expansion brings diminishing returns

C. Large firms can carter for wide markets

D. Small firms can provide personal services

E. All of the above

5. Inferior goods are referred to in Economics as goods

A. Whose quality is low

B. Consumed by very poor people

C. Whose consumption falls when cunsumers’ income rises

D. Which satisfy only the basic needs

E. None of the above

6. To discourage the consumption of harmful commodities, government should tax such commodities
if they have

A. elastic demand

B. inelastic demand

C. negative demand

D. positive demand

E. unitary demand

7. The formular used by the Expenditure approach to calculate National income is

A. Y=C + I + X – M –G
B. Y= C + X – M – I + G

C. Y = C + I + G + X – M

D. Y = C – I + X – M + G

E. Y = C + G – X + M – I

8. A producer who can only influence the price of his product but canNOT determine the quantity to
be sold is referred to as

A. duopoly

B. monopolist

C. monopsonist

D. oligopoly

E. perfect competitor

9. Government expenditure on universal basic education and subsidy on agriculture are aimed at

A. encouraging growth of the economy

B. projecting images of government

C. re-allocation of resources

D. redistribution of income and wealth

E. stabilization of the economy

10.  Which of the following measure will NOT serves as a control during inflation period?

A. increase in personal income tax

B. increase in bank rate and interest

C. increase in government capital expenditure

D. reduction in money supply

E. reduction in government recurrent expenditure

11. Which of the following is a determinant of elasticity of supply?

A. Consumer’s income

B. Degree of necessities

C. Durability of the product

D. Number of uses of the commodity

E. Proportion of income spent on the product

12. Entrepreneur is associated more with

A. capital management

B. production of beverage

C. profit making

D. profit sharing
E. risk bearing

13. Inflation is a …………….

A. general increase in the price of a single product

B. period of economic recession

C. period of hunger

D. period of excessive money

E. persistent rise in the general price level

14. Which of these factors causes a change in the quantity demanded of a commodity?

A. Income

B. Population

C. Price of other commodities

D. Price of the commodity concerned

E. Taste and fashion

15. One of the positive contributions of the petroleum industry to Nigeria’s economic development is
that it

A. creates ecological problems

B. creates political unrest

C. creates uncertainties in government revenues

D. is a major foreign exchange earner

E. suppresses agricultural development

16.  The unit for measuring changes in prices and output is called ………………. index

A. capital

B. expenditure

C. income

D. money

E. price

17. A firm is said to be a public joint-stock company when it

A. has unlimited liability

B. is administered by the public

C. is owned by the government

D. operates as a public corporation

E. sells its shares to members of the public

18. The growth of a country’s population is affected by

A. military might of the country

B. number of births per thousand of the population

C. number of people willing to be counted

D. the amount of money in circulation

E. the number of men in the population

19. The price and quantity of crude oil and petrol sold to other countries by Nigeria is fixed by the

A. ECOWAS

B. IMF

C. OPEC

D. NNPC

E. none

20. Taxes levied on locally manufactured goods are called

A. custom duties

B. excise duties

C. purchase tax

D. sales tax

E. VAT

21. Which of the following is a form of business enterprise?

A. Cartel

B. Entrepreneurship

C. Partnership

D. Stock exchange

E. Supermarket

22. The demand curve of a perfect competitive market is infinitely elastic indicating that the firm can

A. refuse to sell any quantity

B. sell any quantity of output at the prevailing price

C. sell fixed quantity of output at the prevailing market price

D. sell less quantity

E. sell more quantity at a higher price

23. Through membership of the Economic Community of West African States (ECOWAS) countries
have achieved

A. a large market for their products

B. emancipation of Africa

C. full employment of resources

D. higher transportation cost of goods within the region

E. military superiority over other African countries

24. Economic growth can be defined as

A. a rapid and sustained rise in real output per head

B. A rise in real income per head

C. an increase in technology only

D. insufficiency in food production

E. over population in a country

25. A monopolist is a

A. duopolist

B. group of producers of related goods

C. partnership business that produces a commodity with high demand

D. single producer or seller of a commodity at cheap rate

E. single producer or seller of a commodity that has no close substitute

26.  The purchasing power of the Naira will fall when

A. worker are retrenched

B. the colour of the Naira is changed

C. the military take over

D. there is inflation

E. none

27. The process of building up country’s capacity to process raw materials for the production of
goods is known as

A. firm

B. industry

C. industrialization

D. location of industry

E. localization

28. Which of the following is a function of the central bank?

A. Accepting deposits from the public

B. Agent of payment for individuals

C. Discounting bills of exchange

D. Issuing of currency

E. Provision of short term housing loans

29. Which of the following is a determinant of elasticity of supply?

A. Consumer’s income
B. Degree of necessities

C. Durability of the product

D. Number of uses of the commodity

E. Proportion of income spent on the product

SS2 ECONOMICS EXAM QUESTIONS THIRD TERM – EDUDELIGHT.COM

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