2019 NECO ECONOMICS ANSWERS, THEORY & OBJ
SECTION A:- Answer 1 Question
( 1 & 2 )
SECTION B:- Answer Any 4 Question
( 3 – 11 )
ANSWER 1 QUESTION ONLY
( NUMBER 1 )
1a) Income elasticity of demand is the degree of responsiveness of demand to changes in the income of consumers.
2019 NECO ECONOMICS ANSWERS, THEORY & OBJ
1b) % changes in Qd = new Qd-old Qd/ old Qd × 100/1
=250 – 150/ 150 × 100/1
=100/150 × 100/1
= 66.67% (2 d.p)
.% changes in Income
= new income – old income/ old income × 100/1
= 600,000- 300,000/300,000 × 100/1
= 300,000/300,000× 100/1 = 100
If % changes in Qd = 66.67%
and % changes in income = 100%
Therefore: co-efficient of income elasticity of demand
= %changesQd/% changes *I* (income)
1c) Inelastic Demand
1d) Bournvita to Mr. Dantani is a normal goods. That is so because when Mr. Dantani’s income rose from N300,000 to N600,000, his demand for bournvita also increased from 150 to 250, thus indicating positive elasticity. This is usually the case with normal goods
( SECTION B )
ANSWER 4 QUESTION ONLY
( NUMBER 4 )
[Choose Any FIVE]
(i)Open Market operation (OMO)
(ii)Liquidity ratio or cash ratio
(i) Open Market operation (OMO): Open market operation is the purchase or sale of government securities in the open market to expand or restrict the volume f money in circulation. The central bank applied this policy with the aim of regulating the volume of money in circulation. When there is too much money in circulation, the central bank will sell securities.But in order to expand the volume,it buys securities.
(ii) Liquidity ratio or cash ratio: The commercial banks are mandated by the government to keep a special people, eg 25% of their total deposit with the central bank in order to control the volume of credit .The size can be expanded or contracted depending on the economic condition of the nation.
(iii) Bank rate: Bank rate is the minimum rate of interest charged by the central bank for discounting bill of exchange. By lowering or raising the rate,the central bank can control the activities of the commercial banks.When the rate increases,loan to the public (customers) reduces,while a fall in the rate will encourage more loan
(iv) Special directives: The central bank can issue directives or specific instructions to the commercial banks and other financial institutions to restrict their lending or credit policy or on the direction to which loaning should follow. They will be told to direct their funds to sectors which are in need of investment
(v) Special deposit: special deposit is also an instrument of monetary policy which is used to restrict lending.The central bank can order the commercial banks to have special deposits, usually a percentage of the bank’s deposits, to be made with it.This is intended to control credit and is often used during the period of Inflation to reduce cash with bank. The central bank will mandate the commercial banks to keep special deposit over the statutory requirement
(vi) Moral suasion: The central bank can make an appeal to the commercial banks to restrict or expand the level of credit to the public . Moral suasion is not based on the use of force but an appeal to restrict or expand the lending policy
(i)Inconsistent government policies:Inconsistent government policies on agriculture reduce agricultural development. The policies at tomes fail to recognise the rural farmers that produce food for the country. Most of the policies are centred around fake city farmers who only collect money from government and use them for other purpose
(ii)Land Tenure system:The type of land tenure system in Nigeria discourages farmers from acquiring the land for large scale farming. The communal system of land tenure has a number of adverse affects. people who wish to farm on the large scale and who do not belong to the community may find it difficult to acquire enough land.In some places, non-members of the community who wish to farm on the community’s land may not be allowed to do so. The land cannot be sold to outsiders.
(iii) Problems of Pest and disease:-The constant attacks on crops and animals by diseases and pests contribute to low productivity. Many crops are destroyed by diseases and pests before the harvesting period. Caterpillars, beetles, and army-worms destroy many crops. The mealybug has consistently been attacking cassava in many areas. The presence of tsetse fly causes cattle disease. The destruction of agricultural products by pests and diseases leads to a poor yield per hectare.
(iv)Poor marketing system:-There are no organized marketing channels for farm produce .There is also lack of proper pricing for agricultural produce. Facilities for the marketing and distribution of food crops are inadequate .Many famers are not willing to increase output since they cannot easily market their products.
Also, low fluctuating prices of agricultural products, brought about by some other constraints to agricultural development, discourage productivity.
(v)Poor Transportation Facilities:-Many farming areas are not served with good roads or other means of transportation. Farmers in such remote areas therefore finds it difficult to evacuate their agricultural produce for sale. Many of the farm products perish before they reach their destination due to the bad roads and inadequate feeder roads. Farmers in such areas are therefore forced to curtail their production since large-scale production does not yield them much dividend.
(vi)Inadequate Storage Facilities:-At present, there are inadequate storage facilities for many crops such as silos for grain, cold rooms for perishable commodities, etc. These are either not available or insufficient. Agricultural products are spoiled while being stored under inadequate tropical conditions due to attack by pests or adverse weather conditions. This reduces the farmer’s incentive to produce on a large scale.
(6a)Capital market is a market which provide medium-term and long term loans. It serves the needs of industry and the commercial sector. It comprises all the institutions which are concerned with either the supply of or demand for long term capital
(i)Provision of long term loan:Capital market provides long term loans to the private and public sectors for investment.
(ii)Growth of Merchant bank:The existence of capital market helps the growth and development of merchant banks
(iii)Mobilization of savings:Capital market plays an important role in mobilizing saving for investment for the development of economics and industries
(iv)General running of the economy:The existence of capital market encourages the general public to participate in the running of the economy of the country
(i)Provision of technical assistance:It helps to provide technical assistance for projects. such assistance may be in the areas of conducting feasibility studies ,financing and executing projects
(ii)Provision of loan:It aid economic and social development through the provision of loans for the financing of viable projects in member countries
(iii)Promotion of Private/public investment:It helps to promote both private and public investigate in projects which contribute to the economic and social development of member states
(iv)Foster economic integration:It foster economic integration among member countries. Because of limited resources of ADB, It gives priority to projects which benefit a number of member countries and those who generate employment opportunity for people from member state
(v)Provision of fund:They provide fund for the supply and development of infrastructural facilities such as electricity ,water,transport and telecommunications and also provide fund for agricultural development of member countries
Industrialization is a phenomenon in the development of nations, characterized by the growth of machine and power tools production, the growth of mechanical and technical skills (technology) required for industrial production, with attendant large-scale production all of which leads to changes in the social and economic organization of society.
(I) To tackle the problem of managerial and technical know-how, the Centre for Management Training was made an agent of the Nigerian Enterprises Promotion Board. It was to help in training indigenous personnel. The Manufacturers’ Association of Nigeria and the Nigeria Employers’ Consultative Association were to organize seminars for indigenous personnel.
(II) To combat the issue of possible collusion and sabotage of the decree, the decree provided for very stiff penalties for any Nigerian found sabotaging the efforts of the decree. Any Nigerian found guilty of such criminal lack of patriotism was to pay a fine of N150,000.00 or go to jail for five years, or both. It is not easy to deal with the problem of a few Nigerians being enriched at the expense of the masses.
(III) To combat the possible problem of capital outflow in the short run, a member of regulations were made. There regulations included:
– That there would be no repatriation of funds in cases where the masses were sold to non-Nigerians.
– Repatriation was not allowed for the sale of real estates which were developed from funds generated locally, except on the final emigration of the owner
(IV) To combat the problem of capital shortage:
– The federal government set up the Nigerian bank for commerce and industry. The primary objective was to provide the necessary funds for acquiring the businesses of foreigners affected by the decree.
– Commercial banks were encouraged to give loans to prospective indigenous businessmen for acquiring the business of aliens.
Unemployment is defined as a situation in which persons of working age,able and willing to work are unable to find a paid employment. In order words unemployment refers to a situation in which people who are capable of working and who are qualified by age to work cannot find employment
*[Choose any four]*
(i)industrialisation: Government should establish many industries that can employ many workers
(ii)Population control: Population should be controlled to obtain optimum level,so as to match the human population with available natural resources
(iii)Encouraging geographical mobility of labour:The enabling environment should be able to move from one geographical area to another
(iv)Re-designing educational system:The education system should be redesigned to graduate people that are able to create employment
(v)Proper development plans:Proper development plans should be put in place to cater for people who are unemployed
(vi)Provision of social amenities:The availability of social amenities does encourage workers and this tends reduce unemployment