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JAMB UTME Economics 2020 past questions and answers

This 2020 JAMB UTME Economics set has 40 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2020 set with instant marking.

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Sample JAMB UTME Economics 2020 questions

1. In the long run, a firm operating under perfect competition is expected to earn
  1. a persistent supernormal profit because it controls the market price
  2. normal profit as entry and exit remove abnormal profit or loss
  3. a loss because its marginal cost must exceed average revenue
  4. monopoly profit protected by barriers to entry

Answer: B. normal profit as entry and exit remove abnormal profit or loss

Free entry and exit in perfect competition tend to eliminate supernormal profits and losses in the long run.

2. If consumption is N120 billion, investment N60 billion, government expenditure N50 billion, exports N30 billion and imports N10 billion, what is GDP at market prices using the expenditure approach?
  1. N230 billion
  2. N240 billion
  3. N270 billion
  4. N250 billion

Answer: D. N250 billion

GDP is C + I + G + (X - M), which gives 120 + 60 + 50 + (30 - 10) = N250 billion.

3. A consumer price index rises from 125 to 140 in one year; what is the rate of inflation over the period?
  1. 12%
  2. 15%
  3. 10.7%
  4. 25%

Answer: A. 12%

Inflation is (140 - 125) / 125 x 100 = 12%.

4. When the central bank raises the cash reserve ratio, commercial banks will generally
  1. have more funds available for lending
  2. increase their money creation automatically
  3. have less of their deposits available for lending
  4. be required to reduce their statutory reserves

Answer: C. have less of their deposits available for lending

A higher cash reserve ratio requires banks to hold a larger share of deposits, leaving less for loans.

5. When a central bank sells government securities to commercial banks and the public, the immediate intended effect is to
  1. increase liquidity in the banking system
  2. raise the purchasing power of money
  3. increase commercial banks' excess reserves
  4. withdraw liquidity from the banking system

Answer: D. withdraw liquidity from the banking system

Purchasers pay for the securities, transferring funds to the central bank and reducing cash available in the system.

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