Economics 4th Edition Krugman Test

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1. The topics studied in macroeconomics include:
A) inflation.
B) unemployment.
C) economic growth.
D) inflation, unemployment, and economic growth.

2. The topics studied in macroeconomics include:

A) inflation.
B) monopolies.
C) spillovers, such as pollution.
D) mergers.

3. Macroeconomics entails the study of the:

A) overall behavior of the economy.
B) individual decision makers.
C) market structures.
D) cost and production decisions by firms.

4. Macroeconomics focuses on:

A) the economy as a whole.
B) individual decisions.
C) wages.
D) the allocation of scarce resources.

5. The topics studied in macroeconomics include:

A) the price of a motorcycle.
B) the wages of engineers.
C) the average price level in the economy.
D) how much ice cream consumers buy.

6. Which is most likely a macroeconomic, not microeconomic, question?

A) Is the national unemployment rate rising or falling?
B) Are consumers buying more bottled water and less fruit juice?
C) Are salaries for nurses rising or falling?
D) Should a tax be levied on each ton of carbon dioxide a factory emits?

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 7. Which is a microeconomic question rather than a macroeconomic question?
A) Will a decrease in the income tax rate lift the nation out of a recession?
B) Will an increase in consumer spending cause inflation?
C) Will a decrease in the income tax rate lead to a government budget deficit?
D) Will an increase in the cigarette tax reduce the number of packs sold?

8. How the actions of individuals and firms interact to produce a particular economy-wide
level of performance is the focus of:
A) macroeconomics.
B) fiscal policy.
C) monetary policy.
D) microeconomics.

9. Which would most likely be a MICROECONOMIC question?

A) Should I go to business school or take a job?
B) What determines the overall salary levels paid to workers in a given year?
C) What government policies should be adopted to promote full employment and
growth?
D) What determines the level of output for the economy as whole?

10. Which would NOT be classified as a MACROECONOMIC question?

A) How many people are employed in the economy as a whole?
B) What determines the overall level of prices?
C) What determines the overall trade in goods, services, and financial assets between
the United States and the rest of the world?
D) What determines a university's cost of offering a new course?

11. Which question is the most appropriate to the study of MICROECONOMICS?

A) How does the aggregate price level affect consumer spending?
B) How does the level of interest rates affect investment spending?
C) How much will Sony charge for the new game system to be introduced later this
year?
D) How does the GDP affect overall government spending?

12. Which question is the most appropriate to the study of MACROECONOMICS?

A) How does the aggregate price level affect overall consumer spending?
B) How does the level of interest rates affect Delta's decision to buy a new airplane?
C) How much will Sony charge for the new game system to be introduced later this
year?
D) What determines whether Wachovia opens a new office in Beijing?

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13. Promotion of employment and growth in the economy as a whole is the focus of:
A) macroeconomics.
B) fiscal policy.
C) monetary policy.
D) microeconomics.

14. “Macroeconomics is nothing but a simple aggregation of all the microeconomic parts.”
Do you agree or disagree with this statement?
A) Don't agree; there is a lot more to the study of macroeconomics than the sum of its
microeconomic parts.
B) Agree; macroeconomics is exactly equal to the total of all microeconomic units.
C) Don't agree; these two disciplines deal with completely independent issues.
D) Don't agree; microeconomics is an aggregation of all the macroeconomic parts.

15. If all of the households and businesses start saving more during economic hard times,
then aggregate income will fall, hurting everyone in the economy. This is known as:
A) the quantity theory.
B) the crowding-out theory.
C) the paradox of thrift.
D) the permanent income hypothesis.

16. The concept that the whole is greater than the sum of its parts best characterizes:
A) microeconomics.
B) supply and demand.
C) macroeconomics.
D) business forecasting.

17. A key insight into macroeconomics is that in the short run the combined effect of
individual decisions:
A) is always the same as what one individual intended.
B) may be very different from what any one individual intended.
C) is always beneficial to the economy as a whole.
D) is always detrimental to the economy as a whole.

18. A rubbernecking traffic jam is an example of:

A) microeconomics in action.
B) individual behavior that has a large aggregate impact.
C) the paradox of thrift.
D) an outcome smaller than the sum of its parts.

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19. What do a rubbernecking traffic jam and the paradox of thrift have in common?
A) Individual behavior has large negative consequences for the whole of society.
B) Seemingly bad behavior ends up harming everyone.
C) Seemingly careless behavior leads to good times for all.
D) Government intervention can only make matters worse.

20. In the paradox of thrift:

A) firms that are pessimistic about the future lay off the most saving-conscientious
workers.
B) when families and business are feeling pessimistic about the future, they spend
more.
C) increased saving by individuals increases their chances of becoming unemployed.
D) risky behavior during economic tough times has large negative consequences for
society.

21. In contrast to the conclusions drawn from microeconomics, many economists argue that
in macroeconomics, government:
A) control of rent prices increases overall economic activity.
B) intervention in markets usually leaves society as a whole worse off.
C) taxation of goods and services does not cause a deadweight loss of economic
welfare.
D) intervention in markets can prevent or reduce the effects of adverse events on the
macroeconomy.

22. Which of the following areas is most likely to suggest a limited role for government?
A) microeconomics
B) macroeconomics
C) behavioral economics
D) labor economics

23. The view that the government should take an active role in the macroeconomy dates to:
A) the Civil War.
B) World War I.
C) the Great Depression.
D) the Vietnam War.

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24. Changing the level of government spending is an example of _____ policy.
A) fiscal
B) interest rate
C) monetary
D) exchange rate

25. The modern macroeconomic tools used by the government are _____ policy and _____
policy.
A) tax; antitrust
B) fiscal; monetary
C) monetary; exchange rate
D) capital; labor

26. Changing interest rates is an example of _____ policy.

A) fiscal
B) tax
C) monetary
D) exchange rate

27. Fiscal policy refers to changes in _____ to affect overall spending in the economy:
A) interest rates
B) government spending and taxation
C) the quantity of money
D) interest rates and of government spending

28. The economist whose writings in the 1930s argued that the cause of an economic
depression is inadequate spending was:
A) Herbert Hoover.
B) John Maynard Keynes.
C) Andrew Mellon.
D) Joseph Schumpeter.

29. One role of government policy is:

A) to provide insurance to cover damages from macroeconomic fluctuations.
B) to attempt to manage short-run macroeconomic fluctuations.
C) to subsidize private insurance for businesses to cover harm from macroeconomic
fluctuations.
D) to avoid Keynesian economics.

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30. Among the tools available to macroeconomic policy makers is:
A) fiscal policy, for use in manipulating government spending and taxation.
B) antitrust policy, to break up monopolies.
C) environmental policy, to clean up the economy.
D) improving standards for food and drugs.

31. In 1936 economic theory changed dramatically with the publication of:
A) The General Theory of Employment, Interest, and Money, by John Maynard
Keynes.
B) The Wealth of Nations, by Adam Smith.
C) The Road to Serfdom, by F. A. Hayek.
D) Principles of Economics, by Paul Samuelson.

32. The central mission of modern macroeconomics is to prevent:

A) shortages.
B) surpluses.
C) high gas prices.
D) a deep recession like the Great Depression.

33. Which of the following are considered to be the two types of macroeconomic policies?
A) monetary and fiscal policy
B) monetary and regulation policy
C) fiscal and regulation policy
D) fiscal policy and price controls

34. Fiscal policy attempts to affect the level of overall spending by making changes in:
A) the interest rate.
B) the money supply.
C) banking regulations.
D) taxes and spending.

35. Monetary policy attempts to affect the overall level of spending by making changes in:
A) taxes.
B) taxes and spending.
C) taxes and interest rates.
D) interest rates and the quantity of money.

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36. Monetary policy attempts to affect the overall level of spending through:
A) changes in the inflation rate.
B) changes in the quantity of money and the interest rate.
C) changes in tax policy or government spending.
D) discretionary regulation of profits and wages.

37. Fiscal policy attempts to affect the overall level of spending through:
A) changes in the inflation rate.
B) changes in the quantity of money or the interest rate.
C) changes in tax policy or government spending.
D) discretionary regulation of profits and wages.

38. If macroeconomic policy has been successful over time, it is likely that the economy has
not seen:
A) any inflation.
B) any severe recessions.
C) any unemployment.
D) a business cycle.

39. Use of monetary policy entails changes in:

A) government spending.
B) tax receipts.
C) the quantity of money.
D) tax rates.

40. Use of fiscal policy involves changes in:

A) interest rates.
B) government spending.
C) the quantity of money.
D) the quantity of money and interest rates.

41. When the Great Depression reached its trough in 1933, the unemployment rate was
approximately:
A) 5%.
B) 10%.
C) 25%.
D) 50%.

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42. The onset of the Great Depression:
A) was not a shock to anyone, since most economists predicted the roaring '20s were
bound to end in disaster.
B) caused a disagreement between the Hoover administration and conventional
economists because Hoover wanted the government to intervene much more
quickly than most others.
C) came as a considerable shock to the conventional wisdom of economics at that time
and opened the door for critiques of mainstream thought by economists like John
Maynard Keynes.
D) was in 1918 at the end of World War I.

43. The General Theory of Employment, Interest, and Money, written by _____ and
published in _____, transformed the way economists thought about macroeconomics.
A) Milton Friedman; 1946
B) Paul Samuelson; 1940
C) John Maynard Keynes; 1936
D) Paul Lucas; 1966

44. The General Theory of Employment, Interest, and Money was written by:
A) Robert Lucas.
B) David Ricardo.
C) John Maynard Keynes.
D) Thomas Malthus.

45. Keynesian economics stressed:

A) the importance of total spending.
B) the self-correcting power of free markets.
C) the long run.
D) that the Depression should run its course to bring down the high cost of living.

46. In recent times, the U.S. government has been trying to help the economy through one
of the worst economic slumps ever. The policies used are based on _____ theory.
A) Keynesian
B) classical
C) supply-side
D) trickle-down

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47. Keynesian economics promotes ideas:
A) that government intervention can be destabilizing.
B) that the government can help a depressed economy via fiscal and monetary
policies.
C) that the private sector is perfectly capable of regulating itself.
D) that the free market system will always prevail.

48. Changing the quantity of money, hence the interest rate, hence overall spending in the
economy, is use of _____ policy.
A) monetary
B) fiscal
C) free-market
D) trickle-down

49. Changing government spending and taxes to affect overall spending is use of _____
policy.
A) tax-and-spend
B) monetary
C) fiscal
D) free-trade

50. John Maynard Keynes believed that the government should:

A) actively try to mitigate the effects of recessions by using fiscal and monetary
policies.
B) not interfere with the economy but let the economy self-correct.
C) intervene only when there is a boom but let the recession run its course.
D) not use fiscal and monetary policies, as these policies have long-term adverse
effects.

51. Periods in which output and employment are falling are:

A) recessions.
B) booms.
C) expansions.
D) deflations.

52. An expansion is a period in which:

A) output declines.
B) the price level falls.
C) output rises.
D) unemployment rises.

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53. Recessions are periods when:
A) output rises.
B) the aggregate price level rises.
C) the unemployment rate is falling.
D) output and employment are falling.

54. The short-run alternation between economic downturns and recessions, then economic
upturns and expansions is known as the _____ cycle.
A) business
B) contractionary
C) expansionary
D) disequilibrium

55. If during several months the economy is simultaneously increasing its levels of output
and employment, then the economy is in a(n):
A) depression.
B) expansion.
C) recession.
D) turning point between a recovery and a downturn.

56. A business cycle is a:

A) very deep and prolonged economic downturn.
B) period in which output and employment are rising.
C) period in which output and employment are falling.
D) short-run alternation between economic upturns and downturns.

57. The alternation between recessions and expansions is known as the:

A) unemployment rate.
B) long-run economic growth.
C) business cycle.
D) macroeconomy.

58. In a typical business cycle, the trough is immediately followed by the:

A) peak.
B) recession.
C) depression.
D) expansion.

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59. In a typical business cycle, the peak is immediately followed by the:
A) recession.
B) trough.
C) expansion.
D) depression.

60. An economic expansion in the United States is typically associated with a(n):
A) falling inflation rate.
B) increase in the poverty rate.
C) falling unemployment rate.
D) decrease in corporate profits.

61. Economists have identified several consecutive months of falling employment, and
forecasts for the next few months suggest more of the same. The economy is at the
_____ stage of the business cycle.
A) recession
B) expansion
C) peak
D) trough

62. For the past several months, per capita output has increased at a slower and slower rate.
Over the same period, the unemployment rate has been falling, but it appears to have
leveled off and may soon rise. Where in the business cycle is the economy?
A) peak
B) recession
C) trough
D) expansion

63. The point at which a recession ends and the expansion begins is called the:
A) trough.
B) downturn.
C) peak.
D) lag.

64. The trough of the business cycle:

A) comes right after the expansion phase.
B) comes before the recession phase.
C) is a temporary maximum level of real GDP.
D) is a temporary minimum level of real GDP.

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65. A period of rising real GDP is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.

66. A period of falling real GDP is a(n):

A) peak.
B) trough.
C) expansion.
D) recession.

67. A pattern of expansion, then recession, then expansion again is a(n):

A) annual trend.
B) secular trend.
C) business cycle.
D) consumer cycle.

68. The point on a business cycle when real GDP stops rising and begins falling is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.

69. The point on a business cycle when real GDP stops falling and begins rising is a(n):
A) peak.
B) expansion.
C) trough.
D) recession.

70. The sequence of business cycle phases is:

A) peak, trough, expansion, recession.
B) peak, expansion, trough, recession.
C) peak, recession, trough, expansion.
D) peak, expansion, recession, trough.

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 71. Rising total output accompanied by increasing employment is generally known as:
A) stagflation.
B) recession.
C) inflation.
D) expansion.

72. A country's real gross domestic product (GDP), undergoes periodic fluctuations called
a(n):
A) recession.
B) business cycle.
C) expansion.
D) trough.

Use the following to answer questions 73-74:

Figure: The Business Cycle

73. (Figure: The Business Cycle) Look at the figure The Business Cycle. Point B on this
graph shows a(n):
A) peak.
B) trough.
C) expansion.
D) recession.

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74. (Figure: The Business Cycle) Look at the figure The Business Cycle. The movement
from point B to C is called a(n):
A) trough.
B) expansion.
C) depression.
D) peak.

75. A recession leads to all of the following EXCEPT:

A) higher unemployment.
B) reduced output.
C) reduced income and living standards.
D) higher employment.

76. In the United States, recessions are typically associated with a(n):
A) falling unemployment rate.
B) decrease in the number of people living in poverty.
C) decrease in the percentage of Americans with health insurance.
D) increase in corporate profits.

77. The most painful effect of a recession is:

A) inflation.
B) unemployment.
C) money neutrality.
D) liquidity trap.

78. The most painful consequence of a recession is:

A) rising unemployment.
B) increasing inflation.
C) increasing aggregate output.
D) higher interest rates.

79. In many countries, economists adopt the rule that a recession is a period of at least
_____ during which aggregate output falls.
A) one quarter
B) two consecutive quarters
C) three consecutive quarters
D) a full year

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80. The most widely used indicator of the conditions in the labor market is the:
A) unemployment rate.
B) population growth rate.
C) inflation rate.
D) trade deficit.

81. An independent panel of economic experts at the _____ analyzes the macroeconomy
and determines when recessions begin and end.
A) Bureau of the Census
B) President's Council of Economic Advisers
C) Treasury Department
D) National Bureau of Economic Research

82. The purpose of macroeconomic policy is to:

A) bring unemployment closer to the natural rate.
B) reduce the severity of recessions.
C) rein in excessively strong expansions.
D) bring unemployment closer to the natural rate, rein in excessively strong
expansions, and reduce the severity of recessions.

83. According to official statistics for the United States, since the Great Depression:
A) economists are confident that the business cycle has been tamed.
B) the economy has constantly had positive real GDP growth rates.
C) the economy had longer recessions than expansions only during the 1960s and
1990s.
D) the economy has not had another severe and prolonged economic downturn
comparable to it.

84. A depression occurs when:

A) both output and employment increase.
B) the economic downturn becomes extremely deep and prolonged.
C) both price level and unemployment increase.
D) output rises but employment remains unchanged.

85. Long-run growth is the sustained upward trend in:

A) aggregate output per person over several decades.
B) the unemployment rate over time.
C) interest rates over time.
D) aggregate output per person over the business cycle.

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86. Long-run growth is the:
A) sustained upward trend in aggregate output per person over several decades.
B) expansion phase of business cycles.
C) downturn phase of business cycles.
D) sustained downward trend in the employment rate over several decades.

87. Long-run growth is:

A) a sustained upward trend in the economy's overall output per person, which
generates higher incomes and a higher standard of living for its members.
B) an increase in the rate of inflation across time, which reduces real salaries.
C) an increase in the overall output of the economy over a three- or four-year period.
D) a reduction in the price level over decades.

88. Historical evidence shows that for determining a country's living standards, over:
A) an extended period, long-run growth is just as important as the business cycle.
B) short periods, long-run growth is less important than the business cycle.
C) an extended period, long-run growth is much more important than the business
cycle.
D) long periods, it is difficult to determine whether the business cycle or long-run
growth is more important.

89. An increase in the nation's _____ is generally accepted as a long-run indicator of a

rising standard of living.
A) output per person
B) unemployment rate
C) inflation rate
D) trade deficit

90. Long-run economic growth is best measured by:

A) a sustained rise in the production of goods and services.
B) the growth of the money supply.
C) trade surpluses in the long run.
D) the rate of private saving.

91. Which one of the following measures long-run economic growth?

A) a rise in employment
B) an increase in the money supply
C) a sustained increase in the production of goods and services
D) an increase in the labor force

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92. Economists use the term long-term growth to indicate:
A) the expansion phase of the business cycle.
B) growth of the economy over several decades.
C) growth of the economy over one to five years.
D) long-run growth of the value of a company.

93. Per capita economic growth is:

A) growth per unit of capital.
B) growth per person.
C) always accelerated during a business cycle.
D) a sustained increase in interest rates.

94. Which statement about the U.S. economy is FALSE?

A) Since the Second World War, aggregate output has grown more slowly than the
population.
B) Since the Second World War, aggregate output has grown more rapidly than the
population.
C) Since the Second World War, macroeconomic policy has helped make the
economy more stable.
D) Long-run growth per capita is the key to higher wages and a rising standard of
living.

95. Which of the following statements is TRUE?

A) In the past century, the population of the United States has grown faster than
output.
B) Long-run growth models and business cycle models are the same.
C) Since World War II, the economy of Argentina has grown faster than the economy
of Canada.
D) The level of saving is important for long-run growth.

96. Which of the following statements is TRUE?

A) Long-run growth started during the Renaissance.
B) Long-run growth started in the early 1700s.
C) Peasants in eighteenth-century Europe had a standard of living more than 50 times
that of the Egyptian peasants in the age of the pharaohs.
D) Long-run growth is a relatively modern phenomenon.

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 97. Which of the following is TRUE?
A) Inflation means an increase in the overall level of prices.
B) Deflation refers to a decrease in prices only in the energy and transportation
sectors.
C) During inflation most people enjoy an increase in their standard of living even if
their wages don't increase.
D) Inflation was a problem for the first time in the recession of 1929–1933.

98. Inflation:
A) is a movement of the economy toward economic growth.
B) can be thought of as an increase in a nation's standard of living.
C) is a sustained fall in the overall level of prices.
D) is an increase in the overall level of prices.

99. If the economy grew at 3% this year and average prices increased _____, people would
be better off this year than last year.
A) 3%
B) faster than 3%
C) less than 3%
D) faster than 10%

100. If wages grew at 5% last year and average prices grew at 3%, then the average worker:
A) is better off.
B) is worse off.
C) has lost purchasing power.
D) is unaffected.

101. If workers' nominal wages have risen by 50% over a 10 years and prices have increased
by 40% in that same period, then we can safely conclude that the amount of goods and
services workers can buy has:
A) fallen.
B) increased.
C) not changed.
D) decreased in quality.

102. An increase in the nation's overall price level is:

A) long-term economic growth.
B) unemployment.
C) inflation.
D) deflation.

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103. During inflation the _____ price level _____.
A) average; falls
B) average; increases
C) average; remains constant
D) real; falls

104. The annual percentage change in the aggregate price level is negative when there is:
A) deflation.
B) disinflation.
C) inflation.
D) spiraling inflation.

105. With inflation:

A) overall prices are increasing, although some may be decreasing.
B) all prices must be increasing.
C) the economy must be contracting.
D) the economy must be producing at full employment.

106. Inflation:
A) raises the cost of making purchases.
B) can result in a decrease in barter transactions.
C) encourages people to hold cash.
D) is caused by changes in interest rates.

107. In the long run the overall price level is mainly determined by:
A) the business cycle.
B) the price of crude oil.
C) changes in the money supply.
D) the government's budgetary policies.

108. Deflation:
A) raises the cost of making purchases.
B) can result in an increase in employment.
C) encourages people to hold cash rather than invest.
D) is caused by changes in interest rates.

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109. With regard to the aggregate price level, economists generally believe:
A) price stability is desirable.
B) inflation is worse than deflation.
C) deflation is worse than inflation.
D) inflation benefits most retired people.

110. Which of the following is TRUE about inflation and deflation?

A) Both are good for the economy.
B) Inflation is always good for the economy and deflation is always bad for the
economy.
C) Inflation is always bad for the economy and deflation is always good for the
economy.
D) Both inflation and deflation can pose problems for the economy.

111. Inflation affects people adversely because:

A) nominal income falls.
B) purchasing power tends to increase.
C) the budget deficit increases.
D) it causes money to lose its value over time.

112. Which of the following statements is CORRECT?

A) Supply and demand cannot explain why a particular good or service becomes more
expensive relative to other goods and services.
B) Inflation affects only the more advanced countries, whereas less advanced
countries face deflation.
C) Prices of most goods and services remained stable during the Great Depression.
D) When the economy is in recession and jobs are hard to find, inflation tends to fall.

113. Price stability occurs when:

A) the overall price level is zero.
B) the economy is at full employment.
C) the overall cost of living is changing very slowly.
D) food prices have remained the same.

114. If a country sells more goods and services to the rest of the world than it purchases from
the other countries, then the country has a:
A) trade deficit.
B) budget deficit.
C) trade surplus.
D) budget surplus.

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115. If a country has a trade deficit, does it indicate that the country has a serious problem?
A) No. Trade deficits occur when a country's investment spending is higher than its
level of saving.
B) Yes. Trade deficits occur when a country has low productivity.
C) Yes. Trade deficits occur when a country does not have a comparative advantage in
production.
D) Yes. Trade deficits occur when a country has a high budget surplus.

116. Goods and services that are produced in a foreign country but consumed domestically
are called:
A) exports.
B) imports.
C) investment goods.
D) consumer durables.

117. An open economy:

A) trades goods and services with other countries.
B) does not regulate its industries.
C) does not impose taxes on its citizens.
D) allows free practice of speech and religion.

118. A nation whose value of imports exceeds its value of exports is said to have:
A) hyperinflation.
B) a trade deficit.
C) price stability.
D) a trade surplus.

119. An open economy:

A) trades only with its neighbors.
B) trades goods but not services or assets with other countries.
C) does not trade goods, services, or assets with other countries.
D) trades goods and services with other countries.

120. In an open economy:

A) the exchange rate is determined by the government.
B) specialization in activities with a comparative advantage is not possible.
C) trade is beneficial only to the larger economy.
D) there is trade in goods, services, and/or assets with other countries.

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121. The trade balance is the difference between the value of:
A) the trade deficit and the budget deficit.
B) exports and the imports.
C) the exchange rates of two countries that are engaged in international trade.
D) the national debt and the foreign debt.

122. The additional profit earned by Microsoft Corporation by marketing and using a
proprietary method of coding software is a microeconomic issue.
A) True
B) False

123. Fiscal policy entails changes in the quantity of money or the interest rate.
A) True
B) False

124. Monetary and fiscal policy are tools to reduce the severity of recessions.
A) True
B) False

125. One type of macroeconomic policy is antitrust enforcement.

A) True
B) False

126. Fiscal policy can be used to reduce the severity of recessions.

A) True
B) False

127. The business cycle is the long-run alternation between downturns and upturns.
A) True
B) False

128. Expansions are periods when real GDP and employment are growing.
A) True
B) False

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129. Recessions are periods in which output and employment are falling.
A) True
B) False

130. Business cycles are defined by the expansion, contraction, then expansion again of
nominal GDP.
A) True
B) False

131. Following a trough, real GDP increases.

A) True
B) False

132. The peak of the business cycle provides evidence that the recession is over.
A) True
B) False

133. Between 1980 and 2014, inflation wiped out most of the wage gains of the typical
worker.
A) True
B) False

134. A newspaper article documents the closing of a factory and the many jobs that are lost.
A separate article describes the rising U.S. unemployment rate. Why is the first article a
microeconomic issue and the second article a macroeconomic issue?

135. The economy is in a recession and Congress passes legislation to reduce income taxes.
Tom, seeing an increase in his take-home pay, goes to Best Buy and purchases a new
television. Why is the tax cut a macroeconomic issue, while Tom's new TV is a
microeconomic issue?

136. Explain what is meant by the paradox of thrift.

137. What are Keynesian policies?

Page 23
138. Suppose the business cycle is expanding. Predict how the economic indicators of real
gross domestic product, the unemployment rate, and the inflation rate are moving.

139. You read a newspaper article that says the unemployment rate rose this month. Are we
in a recession? Explain.

140. What is long-run economic growth, and why is it so important for a nation's economy?

141. Your boss is impressed with your performance over the past year and has decided to
give you a 5% increase in your salary. Are you unambiguously better off with your
increased salary? What factors must be considered?

142. In a typical business cycle recession, the unemployment rate rises and the inflation rate
falls. Explain these two trends.

143. The United States imports coffee from Brazil and exports cars to Brazil. Is this a
macroeconomic or microeconomic issue?

144. One of the issues of importance to macroeconomists is:

A) the behavior of individuals and their allocation of income.
B) how firms determine the profit-maximizing level of output.
C) understanding how living standards change over time.
D) the behavior of individual markets.

145. In macroeconomics:
A) aggregate data such as real GDP, the price level, and unemployment are analyzed.
B) individual and firm decisions regarding utility and profit maximization are studied.
C) long-term growth is not considered to be important.
D) market intervention from the government is not considered important.

146. The paradox of thrift highlights:

A) the role of investment in the macroeconomy.
B) how individual decisions to save more may worsen a recession.
C) how an increase in spending occurs during recessions.
D) irrational behavior on the part of households.

Page 24
147. Fiscal and monetary policies:
A) have no role in macroeconomic policies.
B) have been used by the government for over 250 years.
C) are most effective in microeconomic settings.
D) are used to correct for short-term economic fluctuations.

148. Fiscal policy entails:

A) setting the money supply.
B) setting levels of taxation and/or government spending.
C) setting interest rates in specific markets.
D) correcting only recessionary problems.

149. Keynesians argue that low levels of spending:

A) are irrelevant.
B) can lead to prolonged recessions.
C) are not helped by monetary or fiscal policy efforts.
D) are evident only during expansions.

150. Setting interest rates and the money supply in an effort to change overall spending in is
use of:
A) fiscal policy.
B) monetary policy.
C) investment.
D) the stock market.

151. Setting government spending and taxes in an effort to change overall spending in an
economy is use of:
A) fiscal policy.
B) monetary policy.
C) investment.
D) the stock market.

152. During the Great Depression, unemployment rates reached as high as:
A) 25%.
B) 50%.
C) 10%.
D) 60%.

Page 25
153. Recessions tend to be _____, and expansions tend to be _____.
A) short; short
B) long; long
C) short; long
D) long; short

154. During a recession, one will often observe:

A) rising aggregate output.
B) rising unemployment rates and falling aggregate output.
C) rising employment rates.
D) zero unemployment rates.

155. When economists measure economic growth, they often use:

A) the inflation rate.
B) the unemployment rate.
C) nominal GDP.
D) real GDP.

156. One normally expects that unemployment increases while aggregate output and
aggregate incomes decrease during:
A) an expansion.
B) government intervention.
C) a recession.
D) the peak of the business cycle.

157. A contraction in the business cycle is:

A) the long run.
B) a recession.
C) accompanied by an increase in employment.
D) viewed as a rarity.

158. When an economy is operating between a trough and a peak of the business cycle, it is
in:
A) an expansion.
B) a contraction.
C) a short-run condition.
D) the beginning of a fall in aggregate spending.

Page 26
159. An economic recovery encompasses all of the following EXCEPT:
A) sustained economic growth.
B) a short-run increase in aggregate production.
C) a time of increasing employment.
D) the end of the business cycle.

160. When an economy is expanding, unemployment tends to _____ and overall prices tend
to _____.
A) fall; rise
B) fall; fall
C) rise; fall
D) rise; rise

161. When an economy's overall production grows faster than its population, it is
undergoing:
A) long-run growth per capita.
B) an increase in nominal GDP.
C) deflation.
D) the paradox of thrift.

162. An overall decrease in the price level is called:

A) inflation.
B) deflation.
C) long-run growth.
D) the result of an increase in economic production.

163. When overall price levels rise over time, it is referred to as:
A) deflation.
B) inflation.
C) an increase in purchasing power.
D) the consumer price index.

164. If an economy is open:

A) anyone can immigrate to the country.
B) trading with other countries makes up a portion of its economy.
C) it does not trade with other countries.
D) Its real GDP will drop.

Page 27
165. A trade surplus occurs:
A) during economic contractions only.
B) when the value of imports exceeds the value of exports.
C) when the value of imports is less than the value exports.
D) when unemployment is rising.

166. If the value of a country's exports is greater than the value of its imports, it is:
A) running a trade surplus.
B) running a trade deficit.
C) in an economic contraction.
D) likely to find its investment spending greater than its level of saving.

167. If a country runs a trade deficit, its investment spending is probably:

A) above its level of saving.
B) less than its level of saving.
C) equal to its level of saving.
D) equal to zero.

168. The relation between a country's level of saving and investment:

A) affects its trade balances.
B) does not affect an open economy.
C) has often been used to correct a trade deficit but not a trade surplus.
D) pertains to trade surpluses only.

Page 28
Answer Key
1. D
2. A
3. A
4. A
5. C
6. A
7. D
8. A
9. A
10. D
11. C
12. A
13. A
14. A
15. C
16. C
17. B
18. B
19. A
20. C
21. D
22. A
23. C
24. A
25. B
26. C
27. B
28. B
29. B
30. A
31. A
32. D
33. A
34. D
35. D
36. B
37. C
38. B
39. C
40. B
41. C
42. C
43. C
44. C

Page 29
45. A
46. A
47. B
48. A
49. C
50. A
51. A
52. C
53. D
54. A
55. B
56. D
57. C
58. D
59. A
60. C
61. A
62. A
63. A
64. D
65. C
66. D
67. C
68. A
69. C
70. C
71. D
72. B
73. B
74. B
75. D
76. C
77. B
78. A
79. B
80. A
81. D
82. D
83. D
84. B
85. A
86. A
87. A
88. C
89. A
90. A

Page 30
 91. C
92. B
93. B
94. A
95. D
96. D
97. A
98. D
99. C
100. A
101. B
102. C
103. B
104. A
105. A
106. A
107. C
108. C
109. A
110. D
111. D
112. D
113. C
114. C
115. A
116. B
117. A
118. B
119. D
120. D
121. B
122. A
123. B
124. A
125. B
126. A
127. B
128. A
129. A
130. B
131. A
132. B
133. A
134. The two articles, a factory closing and the national unemployment rate rising, do seem
related. However an important distinction is that microeconomics is the study of how
individuals and firms make decisions. In this case, the factory owner has decided that

Page 31
 the firm's optimal strategy is to shut down and exit this market. Macroeconomics
examines the overall behavior of the economy. The rising unemployment rate is a
function of many firms adding and subtracting jobs and many workers entering and
leaving the workforce.
135. The tax cut is an example of fiscal policy to stimulate the macroeconomy by giving
people like Tom more money to spend. Consumers like Tom take this additional income
and then make micro decisions about what to do with it.
136. During uncertain economic times, nervous consumers spend less and save more. This
thrift can actually worsen the economy because it stifles consumption and leads to
reduced spending.
137. John Maynard Keynes advocated an active role for the government when the economy
was in recession. He believed that economists and policy makers should use fiscal and
monetary policy to stimulate a weak economy, rather than standing by and allowing the
economy to self-correct.
138. When the economy is expanding, the nation's output is rising because consumers are
spending more of their income on goods and services (and income is rising). The
unemployment rate is falling because firms are hiring workers to produce those goods
and services. The inflation rate is rising because consumers have more money to spend,
which pushes up the overall price level.
139. Maybe; maybe not. Economists at the National Bureau of Economic Research consider
many factors, including unemployment, but identification of a recession entails more
than a single piece of information like the unemployment rate and requires more than
one month of data.
140. Long-run economic growth is the sustained rise in the quantity of goods and services the
economy produces. When long-run growth per capita is rising, each person's share of
the nation's output is rising. This is the key to higher wages and a rising standard of
living.
141. A 5% salary increase may or may not make you better off than you were last year. If
overall consumer prices have increased by less than 5%, there is a good chance that your
purchasing power has increased. An additional factor is the tax effect on your higher
salary and purchasing power.
142. Recessions are typically the result of a decrease in consumer spending. When
consumers buy fewer goods and services, firms produce fewer of those goods and
services. When firms decrease production, they usually decrease employment, and the
rate of unemployment rises. The weak consumer spending can leave a surplus of unsold
goods across the economy. A surplus of unsold goods (or excess inventories) is cleared
when prices fall. Overall prices may not fall (deflation), but they may rise more slowly,
and so the rate of inflation begins to fall.
143. This is a microeconomic issue of comparative advantage in products. Nations export
goods for which they have a comparative advantage and import goods for which they do
not. A nation's trade deficit or surplus with a trading partner depends upon the sum of
the goods that are exported minus the sum of the goods that are imported. The trade
deficit or surplus is a macroeconomic issue.
144. C
145. A
146. B

Page 32
147. D
148. B
149. B
150. B
151. A
152. A
153. C
154. B
155. D
156. C
157. B
158. A
159. D
160. A
161. A
162. B
163. B
164. B
165. C
166. A
167. A
168. A

Page 33
Another random document with
no related content on Scribd:
 ENTRANCE TO THE “AFIN” OR RESIDENCE OF THE ALAFIN OF OYO,
SHOWING TYPICAL YORUBA THATCHING.

Take, for example, the land question. If there is one thing upon
which all the most experienced Nigerian administrators are agreed it
is the absolute essentiality, for the future of the people of the country,
that their use and enjoyment of the land should be secured, not only
against a certain type of European capitalist who covets this rich soil
for his own schemes, and, under the pretence of industrial
expansion, would cheerfully turn the native agriculturist, farmer, and
trader into a “labourer,” but against the class of native who, for his
own ends, for speculative purposes mainly, seeks to undermine
native law and to change the right of user upon which native land
tenure is based, into that of owner at the expense of the community
at large. More especially does this become a question of vital
importance to native communities where, as in Yorubaland, you have
a comparatively dense population which under the pax Britannica is
bound to increase at a very rapid rate, and thus requires every inch
of land for its own future uses. But as matters stand at present, we
cannot, in the Egba district, which, being nearer to Lagos, is more
accessible to certain undesirable influences, both European and
native, and to the infiltration of European laws and customs
regulating the tenure of land, take effective measures to counteract
these influences. We could, of course, if we chose, not in the Egba
district only, but throughout Yorubaland. But there has been a
lamentable reluctance both at home and in the Protectorate to
foresee and cope with a predicament which all realize, which some
from a natural bent of mind inclining them to favour the substitution
everywhere of direct for indirect rule, and others who are of the same
way of thinking but from motives of self-interest may secretly rejoice
at, but which the officials whose hearts are really in the country and
who have sufficient experience to understand the endless and
disastrous embarrassments that the disintegration of native law
relating to land would produce, deeply deplore. What has been the
result? The Egbas are beginning to buy and to sell land among
themselves in absolute violation of their own customs and laws,
thereby laying up for their country a heritage of trouble and inserting
the thin edge of the wedge of their own undoing by letting in the land
monopolist and speculator. This, according to all its professions and
to its actions in some specific circumstances, for which it is to be
warmly commended, is, in the view of the Administration, inimical to
the public interest of the Protectorate. What is springing up in
Abeokuta to-day will spread to the other districts to-morrow—nay, is
doing so.
 Take another example. The welfare of an agricultural community
demands, for many reasons scientifically substantiated, that a stop
should be put to the reckless destruction of timbered areas such as
has been proceeding all over Yorubaland. This is inherently a public
interest, and the Forestry Officer in the discharge of his duties is
merely a servant of the public. But in the Western Province, for the
same reasons, we cannot or are unwilling to put our case to the
native authorities for the protection of the people against themselves
with the same moral force as in the case of the other two provinces.
We are confined, or think we are confined, to simple persuasion.
Now, persuasion by the Forestry Officer alone is one thing, and
persuasion by the Forestry Officer supported by direct
representations from the Executive at Lagos is a very different thing.
It is the latter form of persuasion that has been absent, and very
great credit is due alike to the Forestry Officers and to a
Commissioner trusted by the native rulers, Mr. W. A. Ross, as well
as to the intelligence of those native rulers themselves, that in the
Oyo district both State and communal reserves have been created,
the latter of great extent including the entire valley of the Ogun. But
in the Abeokuta and Ibadan districts persuasion has failed hitherto to
secure any really tangible results. It is almost unnecessary to point
out that the interests of the population do not suffer merely indirectly
and potentially, but directly thereby. Not only does Southern Nigeria
import quantities of timber from Europe when the country should
itself provide for all requirements, but even so primitive a necessity
as firewood is beginning to make itself felt round such towns as Ede,
Abeokuta, and Ibadan.
In these problems the policy of the Southern Nigeria
Administration has been to leave the matter to the native authorities,
in other words, to let the land question slide down a perilous
declivity, and to allow the question of forestry preservation to be left
to the unsupported efforts of the Forestry Department. If this policy of
non-interference had been consistently applied in other directions an
intelligible case, at least, might be made out for it. But the facts are
notoriously otherwise. To mention but one instance. Two years ago
pressure was put upon the Ibadan authorities to vote unpopular
licensing regulations in the interests of temperance, and one of the
incidents subsequently arising out of it was the stoppage of the
Bale’s stipend by the Acting Resident with the concurrence of the
Executive at Lagos! Only last February a Bill called the “Foreign
Jurisdiction Ordinance, 1911,” was passed through the Lagos
Legislative Council, which provides for the extension of the laws of
the colony to the Protectorate of Yorubaland (except Abeokuta)
without the native authorities being even consulted, the Attorney-
General adopting, in effect, the extraordinary position that the
Government could take no account of “agreements, understandings,
or letters” (concluded or written by previous Governors) with the
native chiefs! If the native chiefs realized what the logical outcome of
the Ordinance might mean for them, by an Executive in Lagos, which
adopted the legal argument quoted, there would be ferment from one
end of Yoruba to the other.
It must be clear from what precedes that the time has come when
the whole position of the Yoruba States in relation to the paramount
Power should be reconsidered. The railway and other agencies are
causing the country to move forward very fast, and conditions are
being evolved through the attempt to drive in two directions at once,
which can only lead, if not to the ultimate annexation of Yorubaland,
then to what would, if possible, be even worse—viz. the
strangulation by successive stages of every effective agency in
native government, leaving the chiefs and their councils mere
puppets in the hands of the Lagos Legislative Council. Now neither
of these courses is, I am convinced, desired by the Imperial
Government. The drift is, nevertheless, apparent to all that have
eyes to see and ears to hear. There is a strong party in Lagos
favouring direct rule. There is a combination of distinct influences—in
many respects working unconsciously—making for the break-up of
native land tenure and the undermining of native authority. There is
the increasing danger of leaving the land question unregulated and
the difficulty attending the adoption of adequate measures for forest
preservation.
Only one course would appear open to the authorities if they
desire to stop the dry rot. The first step would consist in getting the
Native Councils—i.e. the Chiefs in Council—of all the districts in the
Western Province to pass an identical measure of national land
preservation which would become known as the Yoruba Land Act.
Inalienability of land is the cardinal principle of Yoruba land tenure.
The preamble of the measure would define Yoruba law and custom
in regard to land. The body of the measure would declare to be
illegal all buying and selling of land, either between natives and
natives or between natives and non-natives, and would establish
limitations of area and time for the holding of leased lands by private
individuals or associations, with provision for revision of rentals at
specified periods. The need of such a measure should be
recognized and the action proposed sanctioned by the Secretary of
State, and the matter should be represented to the native authorities
with all the additional weight which in their eyes it would under those
circumstances possess. It cannot be doubted that were the measure
fully and thoroughly explained to the Native Councils and its urgency
in the interests of their people emphasized, little or no trouble would
be experienced in ensuring its adoption. In the improbable event of
difficulties arising it would be the plain duty of the Administration to
overcome them. The Administration should be able to count in a
matter of this kind upon the support of every patriotic educated
Yoruban. The second step would be more far-reaching—viz. the
general reconstruction of the machinery of national government over
the whole province, and the welding together under the headship of
the Alafin of Oyo—the “King and Lord of Yorubaland,” as he is
described in the British Treaty—working with a Council
representative of all Yorubaland, of the separate districts which
internal anarchy and external aggression between them have
caused to fall away from the central authority. The existing Councils
of the various districts would, of course, remain, but we should have
what we have not at present, a true “Yoruba Council,” a strong
central native Government through which the development, the
progress, and the common welfare of the country could proceed on
definite, ordered, national lines.
This would be Empire-building of the real kind. It would not be
unattended with difficulty. It would require time, much tact, and,
above all, full and frank exposition and explanation. But it is feasible
of accomplishment, and by a policy of this kind alone can one of the
most interesting and promising races of Western Africa hope to
reach, under our supreme direction, its full development. The
elements necessary to the success of such policy exist. They do not
need to be created, but only to have their vitality revived and their
course adjusted and guided.
 PART III
NORTHERN NIGERIA
 CHAPTER I
THE NATURAL HIGHWAY TO THE UPLANDS OF THE NORTH

A casual visitor provided by private kindness with the hospitality of

a stern-wheeler and not, therefore, exposed to the discomforts
(soon, it is to be hoped, to be a thing of the past, with the completion
of railway communications between Lagos and Zungeru) with which
an inexcusably inefficient service of river-boats afflicts the unhappy
official on his way to Northern Nigeria, packed like a sardine, and
feeding as best he can, may be pardoned for finding much of
captivating interest in 400 miles of leisurely steaming, with many a
halt en route, from Forcados to Baro, the starting-point of the
Northern Nigerian Railway to Kano. The heat of the afternoons, the
myriad insect visitors which are heralded by the lighting of the lamps,
blacken the cloth and invade every part of the person accessible to
their attentions, the stifling nights, spent, may be, at anchor under
the lee of perpendicular banks; these are trifles not worthy of
mention by comparison with the rewards they bring. Kaleidoscopic
varieties of scenic effects enchant the eye as hour follows hour and
day follows day on the bosom of this wonderful Niger, passing from
serpentine curves so narrow that the revolving paddles seem in
imminent danger of sinking into the bank itself or snapping against
some one of the many floating snags, to ever broadening and
majestic proportions with vistas of eternal forest, of villages nestling
amid banana groves, of busy fishermen flinging their nets, of
occasional dark massive heads lifted a brief second from the deeps
to disappear silently as they arose, of brilliant blue kingfishers darting
hither and thither. Now the river flows through some natural
greenhouse of palms and ferns, whose nodding fronds are reflected
in the still green waters, now past a fringe of matted creepers gay
with purple convolvulus pierced at intervals with the grey upstanding
hole of the silk cotton tree. Here its course is broken by long
stretches of fine hummocky sand across whose shining surface stalk
the egret and the crane, the adjoining rushes noisy with the cackle of
the spur-winged geese. Here it glides expanding between open
plains bordered with reeds, only to narrow once more as the plain
heaves upward and the tall vegetable growth gives way to arid
granite outcrops, ascending towards the far horizon into high
tablelands. If at dawn the Niger veils its secrets in billowy mists of
white, at sunset the sense of mystery deepens. For that, I think, is
the principal charm of this great highway into the heart of Negro
Africa, the sense of mystery it inspires. Cradled in mystery, for two
thousand years it defied the inquisitiveness of the outer world,
guarded from the north by dangerous shoals and rapids; hiding its
outlet in a fan-shaped maze of creeks. To-day when its sanctuaries
are violated, its waters churned and smitten by strange and ugly
craft, it is still mysterious, vast and unconquered. Mysterious that
sombre forest the gathering shades encompass. Mysterious that tall
half-naked figure on yonder ledge, crimson framed in the dying sun,
motionless and statuesque. Mysterious that piercing melancholy
note which thrills from the profundities beyond, fading away in
whispers upon the violet and green wavelets lapping against the side
of the boat. Mysterious those rapid staccato drumbeats as unknown
humanity on one shore signals to unseen humanity on the other.
Mysterious the raucous cry of the crown-birds passing in long lines
to their resting-place in the marshes. Mysterious those tiny lights
from some unsuspected haunt of natural man that spring into life as
the sun sinks to slumber, and darkness, deep unfathomable
darkness, rushes over the land there to rest until a blood-red moon,
defining once again the line of forest, mounts the sky.
 OUTLINE MAP OF NORTHERN NIGERIA.

From the point of view of navigation and of commerce the Niger is

a most unsatisfactory and uncertain river to work. It can be
described, perhaps, as a river full of holes with shallows between
them. Its channels are constantly changing. It is full of sandbanks
which take on new shapes and sizes every year. The direction of the
water-flow below Samabri, where the bifurcation begins, is so
unreliable that within a few years the Nun has become virtually
useless, the Forcados gaining what the Nun has lost, while there are
recent indications that the process may again be altered in favour
once more of the Nun to the detriment of the Forcados. In the course
of the year the water level varies twenty-seven feet, the period of rise
being from June in an ascending scale until the end of September,
the fall then commencing, the river being at its lowest from
December to May. In the rainy season the banks are flooded in the
lower regions for miles around. In the dry season the banks tower up
in places fifteen feet above water level. Roughly speaking, the Niger
is navigable for steamers drawing five feet in June, six feet in July,
and so on up to twelve feet in the end of September; from November
to April for vessels drawing between four and five feet. But the
conditions of two consecutive years are seldom alike.
Government has done little or nothing to cope with these natural
difficulties. The Admiralty charts available to the captains of
steamers are ludicrously obsolete, and all wrong. No continuous
series of observations have been taken of the river, and no effort
made to tackle the problem of improving navigation. Four years ago,
by Sir Percy Girouard’s directions, soundings were, indeed, taken
over a distance of 350 miles from Burutu (Forcados) to Lokoja at the
junction with the Benue; with the result that only seven miles of
sand-bars were reported to require dredging in order to secure a six-
foot channel all the year round. The experienced merchant smiled.
He is a slightly cynical person, is the West African merchant who
knows his Niger. Anyhow he is still whistling for his six-foot channel.
One dredger, the best which money could buy, was purchased by
the Northern Nigerian Administration. It did a little dredging round
about Lokoja (and the merchants in the south declare that the
performance has made matters worse for them), has been used as a
passenger boat up the Benue, and is now, I believe, filling up the
swamps at Baro; but the six-foot channel still exists as an attractive
theory in the Government Blue Book. There is so much to praise,
administratively speaking, in Nigeria that one feels the freer to speak
bluntly of the failure of Government to handle this matter of Niger
navigation. It is one of the inevitable, one of the many deplorable,
results of dual control over a common territory; one of the
consequences of the long competition between the two rival
Administrations, each quite honestly playing for its own hand and
each quite satisfied that it alone can think imperially. The upshot has
been pernicious to the public interest. The river-service is shocking
from the point of view of efficiency, and enormously costly. The
steamers themselves are falling to pieces. There is no system of
public pilotage, or of lighting. Trading steamers must anchor at night,
which involves, in the aggregate, a great waste of time and money.
The two Administrations are so busy squabbling over their competing
railways and manœuvring to frame rates which will cut one another
out, that the great natural highway into the interior is utterly
neglected.
It is impossible that feelings of respect should not go out, not only
towards the official who labours under these conditions in the Niger
waterways but also towards the merchant building up in quiet,
unostentatious fashion the edifice of commercial enterprise upon
which, in the ultimate resort, the whole fabric of Administrative
activity reposes. I do not now speak of the heads of these powerful
trading firms in Europe, many of whom, by the way, have themselves
gone through the mill in their time. To them England is indebted for
the Imperial position she holds in Nigeria to-day, a fact which is too
apt to be forgotten. I refer to the men, mostly young, in charge of
trading stations on the banks of the Niger and its creeks, living a life
of terrible loneliness amid primitive surroundings in a deadly climate,
separated in many cases several days’ journey from another white
face, not nearly so well housed as the officials (I am describing
Southern Nigeria, be it remembered), and not, like them, helped by
the consciousness of power or stimulated by the wider horizon the
latter enjoy. Thrown entirely on their own resources, usually unfitted
by their previous life to face the privations and isolation of an
existence such as this, very hard-worked—their lot is not an enviable
one. No doubt the hardships they have to endure are incidental to a
career they freely choose, although often enough with little or no
previous comprehension of its character. No doubt the fibres of a
minority will be toughened by their experiences. No doubt these
hardships are infinitely less severe than those which the early
pioneers were compelled to undergo, many succumbing under the
process; but in that connection it should not be forgotten that the
latter had the incentive of carving out their fortunes with their own
hands, whereas the present generation out in Nigeria are not their
own masters. One cannot help reflecting upon the irony of the
contrast between the commiseration so freely lavished at home upon
the spiritual drawbacks of the Nigerian native, and the total lack of
interest displayed by the Church in the welfare of these young
fellows, many of them mere lads, exposed to all the moral
temptations of their savage environment in which only exceptional
natures will detect the broadening spiritual influences. What an
untold blessing would be a periodical visit to their African homes,
fronted by the silent river, invested by the tropical forest, from an
experienced, genial, sympathetic minister of God, who for a day or
two would share their lives and win their confidence.
There is another matter which should be raised. These young men
who come out from England—I refer to the English trading firms only,
not having inquired into the system prevailing among the Continental
firms—do so under a three years’ contract. This is an altogether
excessive period for the Niger. It should be cut down one half. Even
then it would be half as long again as the officials’ term of service.
Professors of tropical medicine and magnates at home may say
what they like about the improvement of health in the large European
settlements. The towns are one thing. The “bush” is quite another.
Speaking generally, the climate of Nigeria, and the conditions under
which four-fifths of white humanity have to live are such as combine,
even in favourable circumstances, to impose the severest strain,
both physical and mental, upon all but a select few. At the end of a
year’s continuous residence, the strain begins to make itself felt in a
multiplicity of ways. Not to acknowledge it, and not to make provision
for it, is, on the part of an employer, penny wise and pound foolish—
to put the matter on the lowest ground.
VIEW OF LOKOJA AND NATIVE TOWN FROM MOUNT PATTEY, LOOKING S.E.
—THE BENUE IN THE DISTANCE.

At Idah we leave Southern Nigeria. That bold bluff of red

sandstone crowned with grey-trunked baobabs and nodding palms—
black with roosting and repulsive vultures—which overhangs the
river at this point, stands out at the dying of the day, a sentinel
pointing to the north. Henceforth the appearance of the country
undergoes a remarkable transformation, more and more
accentuated with every hour’s steaming. High valleys, slopes and
tablelands; a sparser vegetation; masses of granite or red sandstone
vomited promiscuously from broken, arid plains and taking on
fantastic shapes; in the distance, mountain ranges and solitary
rounded eminences—on our right, King William’s range rising to
1200 feet, on our left, Mounts Jervis, Erskine, Soraxte, and many
others, varying from 400 to 1000 feet. The river curves, winds and
narrows, obstructed here and there by dangerous boulders, which
the falling waters bring into view. More substantial, better-thatched
huts appear upon the banks, and around them an increasing number
of robed Africans. Plantations of yams, and guinea corn set out on
parallel, raised ridges, attest a higher skill in cultivation. Cattle are
seen cropping the green stuffs near the water’s edge, and canoes
pass bearing cattle, sheep and goats to some neighbouring market.
We enter the spreading domain of Mohammedan civilization, and
before long we shall find ourselves in a new world, as our gallant
little vessel, none the worse for a narrowly averted collision and
grounding on a sandbank or two, casts anchor at Lokoja. Here
beneath the wooded heights of Mount Patte the wonderful prospect
afforded by the junction of the Niger and Benue unfolds itself, and
presently we shall mingle with robed and turbaned African humanity,
come from immense distances to this great market of the middle
Niger. The mangroves of the Delta, the awesome grandeur of the
forests, these are left far behind. We have entered the uplands of the
North.
 CHAPTER II
NORTHERN NIGERIA PRIOR TO THE BRITISH OCCUPATION

The political events of which Northern Nigeria was the scene last
century are well known, but a brief recapitulation of them is
necessary by way of introduction to the study of its present
conditions, the life of its people, and the accomplishments and
problems of the British Administration.
In the opening years of the nineteenth century, what is now
Northern Nigeria consisted of the shattered remnants of the once
famous Bornu Empire; of seven independent states more or less
(generally less) controlled by chieftains of the remarkable so-called
“Hausa” race, invaders of a thousand years before “out of the East,”
and of the aboriginal inhabitants whose origin is lost in the mists of
antiquity. Scattered throughout the region and constantly shifting
their habitat in response to the necessities of their calling, were
tribes of light-coloured straight-haired people, Fulani, nomadic
herdsmen and shepherds. From the ranks of these people, spread
over West Africa from the Senegal to the Chad, had sprung from
time to time political leaders, divines and men of letters who had
played a conspicuous part in the history of the old Niger civilizations.
The Hausa Chieftains had established a nominal authority over a
wide expanse of territory and were constantly at war with the
aborigines on their borders. It was not, however, for warlike feats, but
for their commerce, farming, cotton and leather industry; for the
spread of their language; for the great centres of human activity they
had formed and for the fertility and prosperity of the land which they
had made their home, that the Hausas were justly renowned all over
Western and Northern Africa. They had evolved no great imperial
dominion whose various parts acknowledged a central Head, such,
alternately, as Melle, Ghanata, Kanem and Bornu; but they had
leavened with their intelligence and fertilised with their industrial
achievements some of the naturally richest areas of tropical West
Africa, and they had earned for themselves in these respects a
widespread fame.
 It was at this period that a learned Fulani, Othman Fodio, fell foul
of the chieftain ruling over the most ancient and aristocratic of the
Hausa States, Gober. The latter, fearing for his authority, ordered all
the Fulani in his country to be slaughtered, with the result that
Othman found himself at the head of a numerous following.
Emerging successfully from the struggle, Othman preached a jihad,
confided sacred standards to his worthiest captains and despatched
them far and wide. The Hausa Chieftains were successively
overthrown and replaced by Fulani, and regions unassimilated
previously by the Hausas were occupied. Othman’s warriors even
crossed the Niger and invaded Yorubaland, a large part of which
they conquered and retained (Ilorin), the forest belt, Yoruba
resistance within it, and, probably, the tsetse fly proving an
insurmountable barrier to further progress southwards. Down the
Niger they advanced no further than the neighbourhood of Lokoja.
Othman adopted the title of Sarikin mussulmi, and during his life and
that of his son Bello, Hausaland experienced for the first time the
grip of a central, directing power. It is doubtful, however, if this
change in their rulers had much effect upon the mass of the
population, to whom dynastic convulsions mean very little, and it is
noteworthy that the Fulani conquerors possessed sufficient statecraft
to interfere but slightly with the complicated and efficient system of
administration and of taxation which the Hausas had introduced.
They took over the government of the towns from the Hausas, the
people in many instances assisting and welcoming them. The
general condition of the country remained pretty much what it had
been. Moreover—and this fact is significant in connection with the
arguments I shall presently adduce as regards the inspiring motive of
the Fulani uprising—such of the old Hausa families who by their
learning and piety had become invested with a special public sanctity
were not generally molested by the conquering Fulani. Thus the
Kauru, Kajura and Fatika families of Zaria, which had given birth to a
long line of Mallams, were preserved in all their authority and dignity
by Othman and his successors.
A period of comparative political quiet ensued. Othman issued
regulations, and caused them to be strictly enforced, inflicting the
severest punishments upon robbers and evil-doers generally. A
recrudescence of spiritual influence and of letters everywhere
manifested itself. Learned men flocked to Sokoto, where Othman
had built his capital, from West and North Africa. The trans-desert
trade revived. Security was so well established that Clapperton, who
visited the country during Bello’s reign, records the common saying
of the time that a woman could pass unmolested through the land,
even if she carried a casket of gold upon her head. With the death of
Bello the influence of the central power, enormously difficult to
maintain in any case owing to the greatness of the area and the
absence of ways of communication, declined. Administrative decay
gradually set in and extended with the years. Little by little the
authority of the Emir of Sokoto was openly questioned, in all save
spiritual matters. Allegiance slackened. Emirs quarrelled amongst
themselves. This or that chief acted on his own responsibility in
political affairs affecting the general weal, or entirely broke away
from control. The roads became infested with bands of highwaymen
whose proceedings differed in no way from the banditti of feudal
Europe. Rebellious chieftains formed robber strongholds. Military
operations degenerated into mere raiding for the capture and sale of
prisoners of war to replenish revenues from ordinary taxation which
the disturbed state of the country was causing to decrease.
There has probably been a natural tendency in recent years to
exaggerate the aggregate effect for evil upon the country which
accompanied the weakening of the Fulani dynasty. There is no proof
that the state of affairs was worse than what had obtained previous
to Othman’s jihad. It could hardly have been worse than the
condition of Western Europe at sundry stages in its history, when the
weakness of the paramount authority and the foraging and strife of
rival Barons combined to desolate the homesteads of the people and
lay waste the country side. Some notion of parallels in approaching
the events of West African history is very desirable, but not often
conspicuous. But there can be no doubt—the evidence of one’s own
eyes in ruined villages and once cultivated areas “gone to bush” is
conclusive—that when the alien Britisher arrived upon the scene as
a reforming political force, Northern Nigeria was once more urgently
in need of a power sufficiently strong to restore order. Such was the
condition of the Hausa States. In Bornu matters had gone from
disorder to chaos, culminating in the final tragedy of Rabeh’s
incursion, the slaughter of the Shehu and the sack of Kuka, the
capital.
There is no need here to describe the events which led to the
British occupation, or to narrate the circumstances attending it. We
have replaced the Fulani in supreme control of the destinies of
Northern Nigeria. We are there to stay. How are we carrying out our
self-imposed mission? What are the problems with which we have to
grapple? These are the questions to examine. But before doing so,
let us first see what manner of people they are over whom we rule
henceforth as over-lords. What is their mode of life, their principal
occupation, their character, and the material and spiritual influences
which direct their outlook and mould their existence?
 CHAPTER III
THE INDIGENOUS CIVILIZATION OF THE NORTH

An attempted reconstruction of the prehistoric period—considered

locally—of that portion of Western Central Africa, now known as
Northern Nigeria, would take up many chapters, and would be
largely founded upon conjecture. It suffices to say that in the course
of ages, through the influences of Moorish, Semitic, and probably
pre-Semitic Egyptian culture, fused in later times with Mohammedan
law, learning and religion, there has been evolved in this region a
civilization combining a curious mixture of Africa and the East, to
which no other part of the tropical or sub-tropical continent offers
even a remote parallel. And this is the more remarkable since these
territories have been separated from the east by inhospitable, mainly
waterless stretches, and from the north by vast and desolate sandy
wastes; while southwards the forest and the swamp cut them off
from all communication with the outer world by sea. The peoples
responsible for the creation of this civilization did not acquire the art
of building in stone, but, at a cost of labour and of time which must
have been gigantic (slave-labour, of course, such as built the
pyramids) they raised great cities of sun-dried clay, encompassing
them and a considerable area around, for purposes of cultivation and
food-supply, with mighty walls. These walls, from twenty to fifty feet
high and from twenty to forty feet thick at the base, in the case of the
larger cities, they furnished with ponderous and deep towered
entrances, protecting the gates with crenellated loop-holes and
digging deep moats outside. They learned to smelt iron and tin; to
tan and fabricate many leather articles durable and tasteful in
design; to grow cotton and fashion it into cloth unrivalled for
excellence and beauty in all Africa; to work in silver and in brass; to
dye in indigo and the colouring juice of other plants; to develop a
system of agriculture including (in certain provinces) irrigated
farming, which, in its highest forms, has surprised even experts from
Europe; to build up a great trade whose ramifications extend
throughout the whole western portion of the continent; to accumulate