FINANCE

ECONOMICS-WAEC ADAPTED QUESTION

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SSCE Economics Adapted Exam Solutions:DISCLAIMER: We disclaim all libility arising from reliance on this article; contact 08067922530 for detailed informartion

Solutions:

Question 1: Basic Economic Concepts

Define Economics and explain the basic concepts of scarcity, choice, and opportunity cost.

Solution:

  • Economics is the study of how individuals and societies make choices about allocating scarce resources to satisfy their unlimited wants.
  • Basic concepts in Economics include:
    • Scarcity: Refers to the limited nature of resources available to meet the unlimited wants of society.
    • Choice: Since resources are scarce, individuals and societies must make choices about how to use their resources effectively.
    • Opportunity Cost: The cost of forgoing the next best alternative when making a decision. It represents the trade-off between alternatives.

Question 2: Law of Demand and Supply

Explain the Law of Demand and the Law of Supply, and their relationship in the market.

Solution:

  • Law of Demand: States that, all else being equal, as the price of a good or service increases, the quantity demanded decreases, and as the price decreases, the quantity demanded increases. This is due to the substitution and income effects.
  • Law of Supply: States that, all else being equal, as the price of a good or service increases, the quantity supplied increases, and as the price decreases, the quantity supplied decreases. This occurs because producers are willing to produce more at higher prices to increase their profits.
  • Relationship: The interaction between the Law of Demand and the Law of Supply determines the equilibrium price and quantity in a market. When demand increases and supply remains constant, prices rise, and when supply increases and demand remains constant, prices fall.

Question 3: Market Structures

Describe the four main types of market structures and provide examples of each.

Solution:

  • Perfect Competition: A market structure where there are many buyers and sellers, all selling identical products. No single firm can influence the market price. Example: Agricultural products like wheat.
  • Monopolistic Competition: A market structure where many firms sell similar but differentiated products. Firms have some control over price. Example: Restaurants and clothing brands.
  • Oligopoly: A market structure dominated by a few large firms, where the actions of one firm can affect the others. Examples: Automobile industry, mobile telecommunications.
  • Monopoly: A market structure where a single firm controls the entire supply of a product or service, with no close substitutes. Example: A public utility company (e.g., electricity supplier in many countries).

Question 4: National Income and Measurement

Explain the different methods of measuring national income and the importance of national income statistics in economic analysis.

Solution:

  • National income refers to the total value of goods and services produced by a country in a given period. There are three methods of measuring national income:
    • The Income Method: Measures national income by summing all the incomes earned by individuals and firms in the economy, including wages, profits, rents, and interest.
    • The Expenditure Method: Measures national income by summing all the expenditures on goods and services in the economy, including consumption, investment, government spending, and net exports (exports minus imports).
    • The Output Method: Measures national income by summing the value-added at each stage of production. It calculates the total value of goods and services produced by different sectors of the economy.
  • Importance of National Income Statistics:
    • It helps policymakers understand the economic health of a country.
    • It is used to make decisions about fiscal and monetary policies.
    • It helps in the comparison of economic performance across countries.

Question 5: Economic Policies

Discuss the objectives and tools of both monetary and fiscal policies in managing the economy.

Solution:

  • Monetary Policy: This involves the management of the money supply and interest rates by the central bank to influence economic activity. Its objectives include controlling inflation, reducing unemployment, and stabilizing the currency. Tools of monetary policy include:
    • Open Market Operations (buying and selling government securities)
    • Changing the reserve requirement for commercial banks
    • Adjusting interest rates (the discount rate)
  • Fiscal Policy: This involves government spending and taxation decisions made by the government to influence economic conditions. Its objectives include stimulating economic growth, reducing unemployment, and controlling inflation. Tools of fiscal policy include:
    • Government spending on infrastructure, education, and healthcare
    • Taxation policies (increasing or decreasing taxes)
  • Both policies aim to maintain a stable economy by controlling inflation, unemployment, and achieving sustainable growth.

Marking Scheme:

  • Question 1: Basic Economic Concepts - 20 marks
  • Question 2: Law of Demand and Supply - 20 marks
  • Question 3: Market Structures - 20 marks
  • Question 4: National Income and Measurement - 20 marks
  • Question 5: Economic Policies - 20 marks

Total: 100 marks

Timing: 120 minutes