2023 - JAMB Economics Past Questions and Answers - page 1

The financial crunch of member states is a major problem facing West African countries. Many countries in the region struggle with debt, insufficient funds for development, and economic instability.

The development of an economic hypothesis through intuition, insight, or logic is most closely associated with induction. * **Induction** involves reasoning from specific observations to a general conclusion or hypothesis. This often involves using intuition, insight, or logic to formulate a hypothesis. * **Deduction** involves reasoning from general principles to specific conclusions. * **Policy economics** deals with the application of economic principles to real-world policy decisions. * **Normative economics** focuses on value judgments and opinions about how the economy *should* be.

In macroeconomics, the term 'investment' refers to the total amount of capital goods in a country. Capital goods are assets used in the production of goods and services, such as machinery, factories, and infrastructure.

It does not specifically refer to immediate consumption or profits, nor is it solely about the total amount of money invested in bonds and stocks.

To find the value of L when S = 20, you substitute S = 20 into the equation S = 4L + 8:

\[20 = 4L + 8\]

Subtract 8 from both sides:

\[12 = 4L\]

Divide both sides by 4:

\[L = 3\]

Therefore, the correct answer is 3.

Export promotion is NOT the cause of balance of payments (BOP) deficits in Nigeria. The poor performance of the non-oil sector, lack of import substitution strategies, and high servicing of debt are factors that can contribute to BOP deficits.

Export promotion, on the other hand, is aimed at increasing a country's exports, which would typically have a positive impact on the balance of payments by bringing in more foreign exchange.

The short run can be defined as the period of time during which at least one of the firm's inputs is fixed. In the short run, some inputs are fixed, while others are variable. Option B correctly captures this characteristic, as it acknowledges the presence of at least one fixed input during this time period.

In a two by two model of international trade, it is assumed that both countries could gain from trade at the same time, but the volume of the gains depends on terms of trade. This means that trade can be beneficial for both countries, but the distribution of those gains is influenced by the terms of trade, which refers to the relative prices of the goods traded between the two countries. Option B correctly captures this assumption.

Cyclical unemployment happens when people lose their jobs due to changes in the economy, like recessions or economic downturns.

During tough times, businesses may cut back on production and hiring, leading to fewer job opportunities. This type of unemployment is temporary and linked to the ups and downs of the overall economy.

When things improve and economic conditions get better, businesses start hiring again, and people find jobs.

So, cyclical unemployment is like a roller coaster ride, going up and down with the economy's highs and lows.

One major criticism of foreign aid to developing countries is that it is capital using rather than capital saving. This criticism suggests that instead of fostering economic development and self-sustainability, foreign aid may be absorbed by the recipient country's consumption and may not contribute significantly to long-term capital formation or growth.

Given \( Q_d = 30 - 4P \) and the initial values \( Q_d = 14 \) and \( P = 4 \), we can find \( \Delta Q_d \) and \( \Delta P \):

\[ \Delta Q_d = Q_d(\text{final}) - Q_d(\text{initial}) = (30 - 4 \times 5) - (30 - 4 \times 4) = 10 - 14 = -4 \]

\[ \Delta P = P(\text{final}) - P(\text{initial}) = 5 - 4 = 1 \]

Now, calculate \( \%\Delta Q_d \) and \( \%\Delta P \):

\[ \% \Delta Q_d = \frac{\Delta Q_d}{Q_d(\text{initial})} \times 100 = \frac{-4}{14} \times 100 \]

\[ \% \Delta P = \frac{\Delta P}{P(\text{initial})} \times 100 = \frac{1}{4} \times 100 \]

Now substitute these into the formula for price elasticity of demand (Ed):

\[ Ed = \frac{\%\Delta Q_d}{\%\Delta P} \]

Q = 14, P = 4

Qd = 30 - 4p

∆q/∆p = - 4

Ed = \(\frac{∆q}{∆p}\times\frac{p}{q}\)

= - 4 x 4/14

= Ed = -1.14

Note: The result is negative since demand is typically inversely related to price, but when stating the result, the negative sign is often dropped. So, if the result is -1.14, you can state it as approximately 1.14.