2012 - JAMB Economics Past Questions and Answers - page 5

A deficit balance of payments is a situation where a country's total debits (payments to other countries) exceed its total credits (receipts from other countries). This imbalance is measured by analyzing the transactions recorded in both the current and capital accounts. The current account tracks trade in goods and services, while the capital account records investment flows. Both are necessary to determine the overall balance of payments.

The reward on machinery and equipment in the process of production is interest.

• Interest: This is the payment for the use of capital, which includes machinery and equipment.
• Profit: This is the reward for the entrepreneur's effort and risk-taking.
• Rent: This is the payment for the use of land.
• Wages: This is the payment for labor.

The question asks for the percentage contribution of the manufacturing sector.

• From the provided image, the manufacturing sector has a percentage contribution of 40.0%.

Here's how to solve the problem:

1. Identify the relevant data:

   • GDP = N60 billion
   • Oil sector contribution = 25% of GDP
   • Manufacturing sector contribution = 7% of GDP

2. Calculate the contribution of each sector:

   • Oil sector contribution = 25/100 * N60 billion = N15 billion
   • Manufacturing sector contribution = 7/100 * N60 billion = N4.2 billion

3. Find the difference:

   • Difference = Oil sector contribution - Manufacturing sector contribution
   • Difference = N15 billion - N3.3 billion = N11.7 billion

The consumer is at equilibrium where the budget line is tangent to the indifference curve. In the provided diagram, point P is the point of tangency between the budget line and an indifference curve. This is the point where the consumer maximizes their utility given their budget constraint.

The movement from point M to K on the indifference curve represents a change in the consumer's consumption bundle.

• At point M, the consumer is consuming a certain amount of good X and a certain amount of good Y.
• At point K, the consumer is consuming more of good Y and less of good X, because K is located on the right side of M (Y axis) and below M (X axis).

Therefore, to move from point M to K, the consumer has to decrease the consumption of X and increase the consumption of Y.

Here's the breakdown:

• Understanding the Diagram: The diagram depicts a labor market, with a supply curve (S) and a demand curve (D) for labor. The minimum wage (OW) is set above the equilibrium wage.

• Impact of Minimum Wage: When a minimum wage is set above the equilibrium wage:

  • The quantity of labor demanded decreases (employers hire fewer workers because labor is more expensive).
  • The quantity of labor supplied increases (more people are willing to work at the higher wage).
  • This creates a surplus of labor, which is unemployment.

• Why other options are incorrect:

  • A. Full employment of resources: The minimum wage actually causes unemployment, so this is incorrect.