Economics, 2010, WASSCE/WAEC MAY/JUNE, Exam, Paper 1 | Objectives

Paper Info

Year :

2010

Title :

Economics

Exam :

WASSCE/WAEC MAY/JUNE

Paper 1 | Objectives

31 - 40 of 48 Questions

#	Question	Ans
31.	The total stock of money available for use in an economy is A. a function of money B. a characteristics of money C. the demand for money D. the supply of money Show Content Detailed Solution Money supply is the total value of money available in an economy at a point of time.	D
32.	Which of the following is not a reason for holding money? A. Ostentation B. Speculations C. Transactions D. Precautionary Show Content Detailed Solution They are three major motives for demanding money; the transactions, the precautionary, and the speculative motives.	A
33.	The best way of combating demand-pull inflation is to A. increase income taxes B. reduce income taxes C. increase import duties D. increase salaries and wages Show Content Detailed Solution Demand-pull inflation is an inflation caused by excess demand. This happens when demand outweighs supply. To curtail demand pull inflation, governments and central banks would have to implement a tight monetary and fiscal policy. Examples include increasing the interest rate or lowering government spending or raising taxes. By increasing interest rates, lowering government spending or raising taxes, the government will be taking out the excess money in circulation. With high interest rates, people would rather save and invest their monies rather than spend it since it attracts high interest. This will take out the excess money in circulation in the economy, reduce people spending power.	A
34.	In which of the following ways has inflation adversely affected your country’s economy? A. increase in money supply B. a fall in real income C. appreciation in the value of money D. increased employment Show Content Detailed Solution Real income is how much money an individual or entity makes after accounting for inflation. One of the effects of inflation has been a fall in the value of real income. Because the value of money falls during inflation, income earners are affected the most. Real income measures the power a person has to purchase items based on how that money is affected by, either increasing or decreasing, inflation. If inflation increases more than income, real income will go down. If inflation decreases and income stays the same, then real income goes up.	B
35.	Which of the following is a legal tender? A. bank notes B. bank overdrafts C. bills of exchange D. money order Show Content Detailed Solution Legal tender is the valid money used for payment of the debt and also recognised by the law of the land. It is a negotiable promissory note which one party can use to pay another party a specific amount of money.	A
36.	The Central Bank controls money supply through all the following except A. lending to the publics B. bank rate C. legal reserve requirements D. open market operation Show Content Detailed Solution Lending to the public is not a way of controlling money supply by the central bank. This is because the central banks do not lend money directly to the public.	A
37.	One of the functions of the Central Bank is A. production of goods B. issuing of currency C. presenting budgets D. printing of cheque books Show Content Detailed Solution Functions of Central Bank	B
38.	The function of the Central Bank as the lender of last resort means that when all other sources fail, A. the consumer can always borrow money from the Central Bank B. the government can ask the Central Bank to print more money C. commercial banks can raise loans from the Central Bank D. commercial banks can deposit money with the Central Banks Show Content Detailed Solution Central banks act as lenders of last resorts to commercial banks by lending them funds so as to stay afloat when the need arises. If banks get into liquidity shortages (run out of money), then the Central Bank is able to lend the commercial bank sufficient funds to avoid the bank running out of funds. If a bank ran out of money, people would lose confidence and want to withdraw their money from the bank. The central steps in by lending these banks money so as they can remain in business.	C
39.	One disadvantages of direct taxes is that they A. allocate scarce resources B. are not rigid C. can be progressive D. can be evaded Show Content Detailed Solution Direct taxes are are taxes such as income tax, which is levied on the income or profits of the person who pays it, rather than on goods or services. One disadvantage of this type of tax is that payers can evade payment. Tax evasion is an illegal activity in which a person or a corporation deliberately avoids paying a true tax or under-pays taxes. Some income earners or companies may deliberately refuse to pay taxes, or reduce their taxable income/inflow to smaller amounts in other to pay lesser taxes. This has been a serious problem of direct taxes	D
40.	Excise duty is levied on A. the total population B. local products C. luxury goods D. the working population Show Content Detailed Solution Excise duty refers to the taxes levied on the manufacture of goods within the country, levied by the government.	B

31.	The total stock of money available for use in an economy is A. a function of money B. a characteristics of money C. the demand for money D. the supply of money Show Content Detailed Solution Money supply is the total value of money available in an economy at a point of time.	D
32.	Which of the following is not a reason for holding money? A. Ostentation B. Speculations C. Transactions D. Precautionary Show Content Detailed Solution They are three major motives for demanding money; the transactions, the precautionary, and the speculative motives.	A
33.	The best way of combating demand-pull inflation is to A. increase income taxes B. reduce income taxes C. increase import duties D. increase salaries and wages Show Content Detailed Solution Demand-pull inflation is an inflation caused by excess demand. This happens when demand outweighs supply. To curtail demand pull inflation, governments and central banks would have to implement a tight monetary and fiscal policy. Examples include increasing the interest rate or lowering government spending or raising taxes. By increasing interest rates, lowering government spending or raising taxes, the government will be taking out the excess money in circulation. With high interest rates, people would rather save and invest their monies rather than spend it since it attracts high interest. This will take out the excess money in circulation in the economy, reduce people spending power.	A
34.	In which of the following ways has inflation adversely affected your country’s economy? A. increase in money supply B. a fall in real income C. appreciation in the value of money D. increased employment Show Content Detailed Solution Real income is how much money an individual or entity makes after accounting for inflation. One of the effects of inflation has been a fall in the value of real income. Because the value of money falls during inflation, income earners are affected the most. Real income measures the power a person has to purchase items based on how that money is affected by, either increasing or decreasing, inflation. If inflation increases more than income, real income will go down. If inflation decreases and income stays the same, then real income goes up.	B
35.	Which of the following is a legal tender? A. bank notes B. bank overdrafts C. bills of exchange D. money order Show Content Detailed Solution Legal tender is the valid money used for payment of the debt and also recognised by the law of the land. It is a negotiable promissory note which one party can use to pay another party a specific amount of money.	A

36.	The Central Bank controls money supply through all the following except A. lending to the publics B. bank rate C. legal reserve requirements D. open market operation Show Content Detailed Solution Lending to the public is not a way of controlling money supply by the central bank. This is because the central banks do not lend money directly to the public.	A
37.	One of the functions of the Central Bank is A. production of goods B. issuing of currency C. presenting budgets D. printing of cheque books Show Content Detailed Solution Functions of Central Bank	B
38.	The function of the Central Bank as the lender of last resort means that when all other sources fail, A. the consumer can always borrow money from the Central Bank B. the government can ask the Central Bank to print more money C. commercial banks can raise loans from the Central Bank D. commercial banks can deposit money with the Central Banks Show Content Detailed Solution Central banks act as lenders of last resorts to commercial banks by lending them funds so as to stay afloat when the need arises. If banks get into liquidity shortages (run out of money), then the Central Bank is able to lend the commercial bank sufficient funds to avoid the bank running out of funds. If a bank ran out of money, people would lose confidence and want to withdraw their money from the bank. The central steps in by lending these banks money so as they can remain in business.	C
39.	One disadvantages of direct taxes is that they A. allocate scarce resources B. are not rigid C. can be progressive D. can be evaded Show Content Detailed Solution Direct taxes are are taxes such as income tax, which is levied on the income or profits of the person who pays it, rather than on goods or services. One disadvantage of this type of tax is that payers can evade payment. Tax evasion is an illegal activity in which a person or a corporation deliberately avoids paying a true tax or under-pays taxes. Some income earners or companies may deliberately refuse to pay taxes, or reduce their taxable income/inflow to smaller amounts in other to pay lesser taxes. This has been a serious problem of direct taxes	D
40.	Excise duty is levied on A. the total population B. local products C. luxury goods D. the working population Show Content Detailed Solution Excise duty refers to the taxes levied on the manufacture of goods within the country, levied by the government.	B