SS2 THIRD TERM ECONOMICS – MULTIPLE CHOICE QUESTIONS (1–70)

1. Which of the following is the total income earned by individuals before tax?

(a) Disposable income (b) Net income (c) Personal income (d) National income (e) Income per
capita Answer: c

2. Disposable income is obtained by subtracting ______ from personal income.

(a) Rent (b) Savings (c) Tax (d) GDP (e) Wages Answer: c

3. GDP stands for:

(a) Gross Domestic Price (b) Government Domestic Product (c) Gross Domestic Product (d) General
Domestic Product (e) Global Domestic Product Answer: c

4. GDP includes:

(a) Earnings of citizens abroad (b) Earnings of foreigners in the country (c) Only government
revenue (d) Private savings (e) Stock exchange earnings Answer: b

5. The difference between GNP and NNP is:

(a) Taxes (b) Depreciation (c) Rent (d) Imports (e) Wages Answer: b

6. National income is the sum of:

(a) Prices of goods and services (b) Government expenditure only (c) All personal and corporate
savings (d) Wages, rents, interest, and profits (e) GDP and exports Answer: d

7. The income per head in a country is called:

(a) Gross National Income (b) National Earnings (c) Per Capita Income (d) Nominal Income (e)
Wage Index Answer: c
8. Which of the following is NOT a method of measuring national income?

(a) Income approach (b) Output approach (c) Expenditure approach (d) Savings approach (e)
Value added method Answer: d

9. Value added is calculated as:

(a) Income - Output (b) Output - Input (c) Profit - Tax (d) Sales - Revenue (e) GDP - GNP Answer:
b

10. The formula Y = C + I + G + (X – M) + Subsidies – Taxes – Depreciation is used to calculate:

(a) GDP (b) NDP (c) National income (d) Disposable income (e) Per capita income Answer: c

11. Which of the following is a limitation of national income estimates?

(a) Double-counting (b) Stable currency (c) Equal distribution (d) National savings (e) Accurate
tax records Answer: a

12. Transfer incomes include all except:

(a) Gifts (b) Wages (c) Scholarships (d) Pension (e) Remittances Answer: b

13. The relationship between cost of living and standard of living is:

(a) Directly proportional (b) Not related (c) Oppositely related (d) Constant (e) Unpredictable
Answer: c

14. The bank that acts as banker to commercial banks is:

(a) Development bank (b) Central bank (c) Merchant bank (d) Insurance bank (e) ESUSU group
Answer: b
15. Commercial banks are primarily involved in:

(a) Issuing currency (b) Printing money (c) Accepting deposits (d) Making government policies (e)
Foreign aid Answer: c

16. Which of these is NOT a liability of commercial banks?

(a) Deposits (b) Shareholder capital (c) Reserves (d) Loans (e) None of the above Answer: d

17. Which of these tools is NOT used by central banks to control inflation?

(a) Bank rate (b) Open market operations (c) Cash reserve ratio (d) Agricultural subsidies (e)
Moral suasion Answer: d

18. A bank that provides long-term loans for industries is a:

(a) Mortgage bank (b) Development bank (c) Central bank (d) Commercial bank (e) Acceptance
house Answer: b

19. The major financial market for long-term borrowing is:

(a) Money market (b) Stock market (c) Capital market (d) Treasury market (e) Bond market
Answer: c

20. Which market deals in short-term financial instruments?

(a) Capital market (b) Primary market (c) Secondary market (d) Money market (e) Mortgage
market Answer: d

21. The major instruments of the money market include:

(a) Shares and stocks (b) Treasury bills (c) Government bonds (d) Mortgages (e) Savings
accounts Answer: b

22. Call money funds are usually:

(a) Fixed for 10 years (b) Long term (c) Overnight and withdrawable on demand (d) Government
deposits (e) Export loans Answer: c

23. The secondary market deals in:

(a) Fresh stocks (b) New issues (c) Used securities (d) Government funds (e) Bank notes
Answer: c

24. The major dealers in the stock exchange market are:

(a) Merchants and bankers (b) Brokers and jobbers (c) Tellers and clerks (d) Auditors and
accountants (e) Economists and statisticians Answer: b

25. The reason why people hold money for daily transactions is called:

(a) Precautionary motive (b) Speculative motive (c) Transactionary motive (d) Reserve motive (e)
Liquidity trap Answer: c

26. Which of these affects money supply?

(a) Rainfall (b) Bank rate (c) Number of voters (d) Labour productivity (e) Tax rate Answer: b

27. Gresham’s Law states that:

(a) Money loses value with time (b) Bad money drives out good money (c) Money can’t be
destroyed (d) Savings equals investment (e) Investment drives inflation Answer: b

28. The value of money increases when:

(a) Prices rise (b) Inflation increases (c) Money supply increases (d) Prices fall (e) Imports rise
Answer: d

29. Speculative motive is associated with:

(a) Emergency expenses (b) Investment opportunities (c) Grocery shopping (d) Salary payments
(e) Rent payments Answer: b

30. Which of the following is NOT a determinant of money value?

(a) Price level (b) Volume of goods (c) Inflation (d) Income tax (e) Velocity of circulation
Answer: d

31. Which of the following is NOT a type of inflation?

(a) Demand-pull (b) Cost-push (c) Open inflation (d) Budget inflation (e) Creeping inflation
Answer: d

32. Inflation caused by increased production cost is known as:

(a) Demand-pull (b) Cost-push (c) Open inflation (d) Persistent inflation (e) Hyperinflation
Answer: b

33. Inflation caused by excessive money chasing few goods is:

(a) Creeping inflation (b) Cost-push (c) Demand-pull (d) Credit inflation (e) Import inflation
Answer: c

34. Which of these is a deliberate increase in prices by the government to fight deflation?

(a) Deflation (b) Reflation (c) Disinflation (d) Recession (e) Devaluation Answer: b

35. An economic condition in which there is inflation and slow production is:

(a) Deflation (b) Reflation (c) Stagflation (d) Disinflation (e) Boom Answer: c

36. Disinflation is used to:

(a) Reduce deflation (b) Boost exports (c) Control inflation (d) Increase government spending (e)
Encourage borrowing Answer: c
37. Inflation reduces the purchasing power of:

(a) Borrowers (b) Creditors (c) Government (d) Exporters (e) Importers Answer: b

38. An effect of inflation is:

(a) Increase in savings (b) Stable prices (c) Loss of confidence in currency (d) Increase in foreign
aid (e) Growth in production Answer: c

39. A rise in general price level over a long period is:

(a) Depression (b) Inflation (c) Deflation (d) Reflation (e) Fluctuation Answer: b

40. One cause of inflation in West Africa is:

(a) Overproduction (b) Low government spending (c) Deficit financing (d) Currency devaluation
(e) Capital flight Answer: c

Certainly! Here's the final batch of the SS2 Third Term Economics Multiple Choice Questions:

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✅ SS2 THIRD TERM ECONOMICS – MULTIPLE CHOICE QUESTIONS (41–70)

41. Physical control to curb inflation includes:

(a) Subsidy (b) Monetary policy (c) Wage freeze (d) Taxes (e) Loans Answer: c

42. Which of these is a monetary policy tool?

(a) Budget deficit (b) Price control (c) Bank rate (d) Wage increment (e) Imports restriction
Answer: c

43. Fiscal policy involves:

(a) Open market operations (b) Bank reserves (c) Government spending and taxation (d)
Speculative investments (e) Import licensing Answer: c

44. Deflation is caused by:

(a) Increased lending (b) Budget surplus (c) Price control (d) Foreign investment (e) Expansionary
policy Answer: b

45. One of the effects of deflation is:

(a) Encouraged borrowing (b) Falling money value (c) High inflation (d) Increased unemployment
(e) High prices Answer: d

46. During deflation:

(a) Borrowers gain (b) Wages increase (c) Exports become cheaper (d) Demand exceeds supply
(e) Money loses value Answer: c

47. Expansionary monetary policy aims to:

(a) Reduce inflation (b) Reduce money supply (c) Increase money supply (d) Freeze wages (e)
Lower demand Answer: c

48. Which policy uses government income and spending to manage the economy?

(a) Monetary (b) Fiscal (c) Trade (d) Banking (e) Currency Answer: b

49. The law that says bad money drives out good money was proposed by:

(a) Keynes (b) Gresham (c) Fisher (d) Smith (e) Ricardo Answer: b
50. Who is the father of the Quantity Theory of Money?

(a) Adam Smith (b) J.M. Keynes (c) Irving Fisher (d) David Ricardo (e) Thomas Gresham Answer:
c

51. An increase in the price level will likely cause:

(a) Higher purchasing power (b) Higher standard of living (c) Inflation (d) Price stability (e) Full
employment Answer: c

52. A stock exchange is part of the:

(a) Primary market (b) Money market (c) Capital market (d) Investment club (e) Government
revenue agency Answer: c

53. Jobbers in the stock exchange:

(a) Deal directly with the public (b) Act on behalf of government (c) Deal only with brokers (d)
Collect taxes (e) Are appointed by CBN Answer: c

54. The main purpose of capital market is to provide:

(a) Short-term loans (b) Loans to exporters (c) Long-term finance (d) Loans to civil servants (e)
Loans to the CBN Answer: c

55. Treasury bills are instruments of the:

(a) Capital market (b) Labour market (c) Money market (d) Primary market (e) Open market
Answer: c

56. Bonds are issued by:

(a) Individuals (b) Firms (c) Government (d) Shareholders (e) CBN staff Answer: c
57. Which of these is a capital market instrument?

(a) Treasury bills (b) Treasury certificates (c) Call money (d) Company bonds (e) Bill of
exchange Answer: d

58. Commercial banks are classified as:

(a) Insurance companies (b) Capital market operators (c) Money market operators (d) Revenue
agents (e) Brokers Answer: c

59. One reason for measuring national income is:

(a) Increase tax (b) Allocate resources (c) Plan the economy (d) Provide insurance (e) Fix prices
Answer: c

60. Which of the following is NOT a cause of deflation?

(a) Budget surplus (b) Restriction on lending (c) Demand-pull (d) Excess supply (e) Use of fiscal
measures Answer: c

61. The ability to purchase goods and services with available income is referred to as:

(a) Inflation (b) Value of money (c) Cost of living (d) Purchasing power (e) Monetary policy
Answer: d

62. Which of the following reduces the value of money?

(a) Deflation (b) Inflation (c) Low GDP (d) High interest rates (e) Budget surplus Answer: b

63. The use of open market operations helps the central bank to:

(a) Devalue the currency (b) Control unemployment (c) Regulate money supply (d) Reduce
savings (e) Increase budget deficit Answer: c

64. The main source of inflation in Nigeria is:

(a) High productivity (b) Export boom (c) Excessive government spending (d) Currency
appreciation (e) Trade surplus Answer: c

65. A country’s standard of living can be measured by:

(a) Money supply (b) GDP growth (c) Per capita income (d) Cost of living (e) Interest rate
Answer: c

66. An example of fiscal policy is:

(a) Bank rate adjustment (b) Reserve requirement (c) Government expenditure (d) Currency
redesign (e) Treasury bills Answer: c

67. Inflation tends to:

(a) Encourage fixed income earners (b) Benefit creditors (c) Hurt debtors (d) Benefit debtors (e)
Increase purchasing power Answer: d

68. If prices rise faster than income, it results in:

(a) High demand (b) Improved welfare (c) Low standard of living (d) Increased savings (e) Positive
balance of trade Answer: c

69. When a central bank reduces the minimum reserve requirement, the effect is:

(a) Reduced lending (b) Less money supply (c) Increased money supply (d) Higher interest rates
(e) Less government spending Answer: c

70. Which of these is an advantage of using national income figures?

(a) Encourages inflation (b) Encourages savings only (c) Helps in economic planning (d) Stops
money laundering (e) Creates employment Answer: c
ESSAY QUESTIONS (1–10)

1.

(a) Define GDP, GNP, and NNP.

(b) Differentiate between GDP and GNP.

(c) Explain how to calculate income per capita.

2.

(a) List and explain 3 methods of measuring national income.

(b) Highlight 3 reasons for measuring national income.

(c) State 2 problems of national income computation.

3.

(a) Define financial institutions.

(b) Differentiate between commercial and central banks.

(c) State 3 roles of commercial banks in economic development.

4.

(a) What is monetary policy?

(b) Explain how the central bank uses open market operations to control inflation.

(c) Highlight 2 other monetary control tools.

5.

(a) What is a stock exchange?

(b) State the difference between the primary and secondary markets.
(c) Explain the roles of brokers and jobbers.

6.

(a) Define inflation and deflation.

(b) State 3 causes of each.

(c) Mention 2 effects of each.

7.

(a) Explain the Quantity Theory of Money.

(b) Who proposed it?

(c) State 2 criticisms of the theory.

8.

(a) What are the motives for holding money according to Keynes?

(b) Define liquidity preference.

(c) List 3 factors that affect the supply of money.

9.

(a) Describe the relationship between cost of living and standard of living.

(b) State 3 factors affecting standard of living.

(c) Define income per capita.

10.

(a) What are the major instruments used in the capital market?

(b) State 2 features of bonds and shares.

(c) Explain the importance of the capital market to economic growth.