WASSCE ECONOMICS PAPER 1 – OBJECTIVE TEST
Preamble
Time Allowed: 1 hour Instructions:
• Answer all questions.
• Each question carries equal marks.
• Choose the correct option (A, B, C, or D) for each question.
• Use a pencil to shade your chosen answer on the answer sheet.
Page 1
1. Economics is primarily concerned with
A. production of goods only
B. allocation of scarce resources
C. distribution of income
D. consumption of goods
2. The basic economic problem arises because
A. wants are limited
B. resources are scarce
C. resources are unlimited
D. production is constant
3. Which of the following is a normative statement?
A. Inflation rate is 12%
B. The government should reduce unemployment
C. GDP increased by 5%
D. Imports exceeded exports
4. Opportunity cost refers to
A. the cost of production
B. the next best alternative forgone
C. total expenditure
D. marginal utility
5. If demand increases while supply remains constant, equilibrium price will
A. fall
B. rise
C. remain constant
D. fluctuate
6. A rightward shift of the supply curve indicates
A. increase in supply
B. decrease in supply
C. increase in demand
D. decrease in demand
7. The elasticity of demand measures
A. responsiveness of demand to price changes
B. total quantity demanded
C. consumer income
D. market equilibrium
8. When price elasticity of demand equals 1, demand is
A. perfectly elastic
B. perfectly inelastic
C. unitary elastic
D. relatively inelastic
9. The law of diminishing marginal returns applies in the
A. short run only
B. long run only
C. both short and long run
D. market period
10. Total cost equals
If TFC = ₦200 and TVC = ₦800, find TC.
TC=TFC+TVC
A. ₦600
B. ₦800
C. ₦1000
D. ₦1200
11. The slope of the supply curve is generally
A. downward
B. upward
C. horizontal
D. vertical
12. The point where demand equals supply is the
A. equilibrium point
B. break-even point
C. marginal point
D. turning point
13. The main function of money as a store of value means
A. it facilitates exchange
B. it retains purchasing power
C. it measures value
D. it is divisible
14. The central bank controls credit through
A. taxation
B. open market operations
C. subsidies
D. grants
15. GDP at market prices is obtained by
GDPmp=GDPfc+Indirect Taxes−Subsidies
If GDPfc = ₦500 billion, Indirect Taxes = ₦50 billion, Subsidies = ₦10 billion, find GDPmp.
A. ₦540 billion
B. ₦560 billion
C. ₦520 billion
D. ₦500 billion
Page 2
16. A country’s balance of payments records
A. government revenue and expenditure
B. exports and imports of goods and services
C. national income
D. domestic production
17. A persistent deficit in the balance of payments can be corrected by
A. increasing imports
B. devaluation
C. reducing exports
D. increasing subsidies
18. Which of the following is a merit good?
A. Cigarettes
B. Education
C. Alcohol
D. Gambling
19. The law of comparative advantage was developed by
A. Adam Smith
B. David Ricardo
C. J.M. Keynes
D. Alfred Marshall
20. The marginal propensity to consume (MPC) is calculated as
MPC=ΔCΔY
If consumption increases by ₦30 when income increases by ₦60, find MPC. A.
0.3
B. 0.5
C. 0.6
D. 0.8
21. Inflation is defined as A. a persistent fall in prices
B. a persistent rise in the general price level
C. an increase in output
D. a fall in money supply
22. Cost-push inflation arises from A. increase in production costs
B. decrease in money supply
C. fall in wages
D. increase in productivity
23. Unemployment rate is given by
UR=UnemployedLabour Force×100
If 4 million people are unemployed out of a labour force of 20 million, find UR.
A. 10%
B. 15%
C. 20%
D. 25%
24. The invisible hand concept was proposed by
A. Karl Marx
B. Adam Smith
C. J.S. Mill
D. Keynes
25. A monopolist maximizes profit where
MR=MC
A. MR > MC
B. MR = MC
C. MR < MC
D. MC = AC
Page 3
26. The short-run period is defined as
A. all factors are variable
B. at least one factor is fixed
C. all factors are fixed
D. no production occurs
27. The law of demand assumes
A. price and quantity demanded move in the same direction
B. price and quantity demanded move in opposite directions
C. income remains constant
D. supply is fixed
28. Which of the following is a leakage in the circular flow?
A. Investment
B. Government spending
C. Saving
D. Export
29. The equilibrium national income occurs where
A. S = I
B. C = Y
C. G = T
D. X = M
30. Public goods are characterized by
A. excludability and rivalry
B. non-excludability and non-rivalry
C. excludability only
D. rivalry only
31. The main objective of fiscal policy is to
A. control inflation and unemployment
B. increase exports
C. reduce imports
D. stabilize exchange rate
32. A regressive tax is one in which A. the rich pay more proportionally
B. the poor pay more proportionally
C. everyone pays equally
D. tax rate increases with income
33. The main function of the stock exchange is to
A. issue currency
B. provide a market for securities
C. regulate banks
D. fix interest rates
34. A country’s terms of trade improve when A. export prices rise relative to import prices
B. import prices rise
C. export prices fall
D. exchange rate depreciates
35. The multiplier (k) is given by
k=11−MP C
If MPC = 0.8, find k.
A. 2
B. 4
C. 5
D. 6
Page 4
36. Which of the following is a direct tax?
A. Value Added Tax
B. Import duty
C. Personal income tax
D. Excise duty
37. The main goal of monetary policy is to
A. control money supply
B. increase exports
C. reduce imports
D. raise wages
38. Which of the following is a capital expenditure?
A. Salaries
B. Road construction
C. Stationery
D. Rent
39. The production possibility curve (PPC) shows
A. maximum output combinations
B. minimum output combinations
C. equilibrium prices
D. total demand
40. A rightward shift of the PPC indicates
A. economic growth
B. economic decline
C. inflation
D. unemployment
41. The law of diminishing marginal utility explains
A. upward-sloping demand curve
B. downward-sloping demand curve
C. upward-sloping supply curve
D. vertical supply curve
42. The main aim of privatization is to
A. increase government control
B. improve efficiency
C. reduce competition
D. increase public ownership
43. The exchange rate is the
A. price of one currency in terms of another
B. interest rate on loans
C. tax rate
D. inflation rate
44. Depreciation of a currency makes exports
A. cheaper
B. more expensive
C. unchanged
D. less competitive
45. The main source of government revenue in developing countries is
A. income tax
B. foreign aid
C. petroleum revenue
D. customs duties
46. A budget deficit occurs when
A. expenditure exceeds revenue
B. revenue exceeds expenditure
C. imports exceed exports
D. savings exceed investment
47. The law of supply states that
A. price and quantity supplied move in the same direction
B. price and quantity supplied move in opposite directions
C. supply is fixed
D. demand is constant
48. If the price of a good rises from ₦10 to ₦12 and quantity supplied increases from 100 to 140
units, find the price elasticity of supply (Es):
Es=ΔQ/QΔP/P
Es=40/1002/10=2
A. 0.5
B. 1
C. 2
D. 4
49. The main objective of economic development is to
A. increase per capita income
B. increase population
C. increase imports
D. reduce savings
50. The human development index (HDI) combines
A. income, education, and health indicators
B. income and savings C. exports and imports
D. GDP and inflation