NECO Economics Past Questions And Answers (Objective and Theory)

 

Section A: Multiple Choice Questions

 

Question: In international trade, what is a trade surplus?

a) Excess imports over exports

b) Excess exports over imports

c) Balanced imports and exports

d) No trade occurring

Answer: b) Excess exports over imports

Question: What is the role of the Federal Deposit Insurance Corporation (FDIC)?

a) Regulate stock markets

b) Insure bank deposits

c) Control interest rates

d) Manage government spending

Answer: b) Insure bank deposits

Question: Which of the following is a characteristic of a perfectly elastic demand curve?

a) Relatively flat slope

b) Steep slope

c) Horizontal line

d) Vertical line

Answer: c) Horizontal line

Question: What does the term “elasticity of supply” measure?

a) Responsiveness of quantity demanded to a change in price

b) Responsiveness of quantity supplied to a change in price

c) Total revenue from a good

d) Consumer preferences for a product

Answer: b) Responsiveness of quantity supplied to a change in price

Question: Which economic concept is illustrated by the trade-off between guns and butter?

a) Opportunity cost

b) Diminishing marginal utility

c) Elasticity of demand

d) Consumer surplus

Answer: a) Opportunity cost

Question: What is the role of the Securities and Exchange Commission (SEC)?

a) Regulate international trade

b) Enforce environmental regulations

c) Regulate financial markets and protect investors

d) Control fiscal policy

Answer: c) Regulate financial markets and protect investors

Question: Which of the following is a characteristic of a command economy?

a) Decentralized decision-making

b) Government ownership of resources

c) Market-driven prices

d) Limited government intervention

Answer: b) Government ownership of resources

Question: What is the primary function of the World Bank?

a) Regulate global monetary policy

b) Provide financial assistance for infrastructure projects in developing countries

c) Facilitate international trade negotiations

d) Enforce antitrust laws

Answer: b) Provide financial assistance for infrastructure projects in developing countries

Question: What is the difference between explicit and implicit costs in economics?

a) Explicit costs are monetary, while implicit costs are non-monetary

b) Explicit costs are associated with variable inputs, while implicit costs are associated with fixed inputs

c) Explicit costs are historical costs, while implicit costs are future costs

d) Explicit costs are short-term costs, while implicit costs are long-term costs

Answer: a) Explicit costs are monetary, while implicit costs are non-monetary

Question: What is the purpose of a production possibilities curve (PPC)?

 

a) To illustrate the impact of inflation on an economy

b) To demonstrate the relationship between supply and demand

c) To show the maximum output combinations of two goods with limited resources

d) To depict the distribution of income in a society

Answer: c) To show the maximum output combinations of two goods with limited resources

Question: Which market structure is characterized by a single seller with significant control over the market?

 

a) Perfect competition

b) Oligopoly

c) Monopoly

d) Monopolistic competition

Answer: c) Monopoly

Question: What is the role of the International Monetary Fund (IMF)?

 

a) Regulate international trade

b) Provide financial assistance to countries facing balance of payments problems

c) Enforce labor laws globally

d) Manage government spending

Answer: b) Provide financial assistance to countries facing balance of payments problems

Question: What is the difference between a progressive and regressive tax system?

 

a) Progressive taxes take a higher percentage of income from high-income earners

b) Regressive taxes take a higher percentage of income from low-income earners

c) Both a and b

d) Neither a nor b

Answer: c) Both a and b

Question: In the context of international trade, what is protectionism?

 

a) Encouraging free trade

b) Imposing barriers to restrict imports

c) Promoting specialization

d) Establishing a gold standard

Answer: b) Imposing barriers to restrict imports

Question: What is the law of diminishing marginal utility?

 

a) The more you consume of a good, the greater your total utility

b) As the price of a good decreases, the quantity demanded increases

c) The additional satisfaction from consuming one more unit of a good decreases as more units are consumed

d) Total utility remains constant as consumption increases

Answer: c) The additional satisfaction from consuming one more unit of a good decreases as more units are consumed

 

Section B: Theory Questions (Continued)

 

Question: Explain the concept of externalities and provide an example.

 

Answer: Externalities are unintended side effects of economic activities that affect third parties. For example, air pollution from a factory impacting the health of nearby residents is a negative externality.

Question: Describe the concept of comparative advantage in international trade.

 

Answer: Comparative advantage is the ability of a country to produce a good or service at a lower opportunity cost than another country. It forms the basis for mutually beneficial international trade.

Question: Discuss the functions of money in an economy.

 

Answer: Money serves as a medium of exchange, unit of account, store of value, and standard of deferred payment, facilitating efficient transactions and economic activities.

Question: Explain the concept of fiscal policy and its tools.

 

Answer: Fiscal policy involves government decisions regarding taxation and spending to influence the economy. Tools include changes in tax rates and government spending to achieve economic objectives.

Question: Discuss the impact of globalization on economies.

 

Answer: Globalization refers to increased interconnectedness and interdependence among countries. It can lead to economic growth, but also challenges like income inequality and cultural homogenization.