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NECO SSCE Economics 2012 past questions and answers

This 2012 NECO SSCE 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 2012 set with instant marking.

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Sample NECO SSCE Economics 2012 questions

1. Country K can produce either 12 tonnes of cocoa or 6 tonnes of rice with the same resources, while Country L can produce either 8 tonnes of cocoa or 8 tonnes of rice; which country has a comparative advantage in rice?
  1. Country K, because it produces more cocoa
  2. Neither country, because their output levels differ
  3. Country L, because its opportunity cost of rice is lower
  4. Country K, because its opportunity cost of rice is lower

Answer: C. Country L, because its opportunity cost of rice is lower

Country K gives up 2 tonnes of cocoa per tonne of rice, whereas Country L gives up 1 tonne, so L has the lower opportunity cost.

2. Which policy is most directly intended to reduce a persistent balance-of-payments deficit caused by excessive imports?
  1. Restricting selected imports through tariffs or quotas
  2. Increasing government spending on imported goods
  3. Reducing domestic production of export goods
  4. Encouraging residents to spend more on foreign travel

Answer: A. Restricting selected imports through tariffs or quotas

Import restrictions can reduce foreign-exchange payments for imports and therefore help narrow the deficit.

3. If a country's export price index is 120 and its import price index is 150, what is its terms-of-trade index?
  1. 125
  2. 30
  3. 270
  4. 80

Answer: D. 80

The terms-of-trade index is (export price index / import price index) x 100, which equals (120 / 150) x 100 = 80.

4. All else being equal, what is a likely immediate effect of devaluing a country's currency?
  1. Imported goods become cheaper in domestic currency
  2. Exports become cheaper to foreign buyers and imports dearer to residents
  3. The country's domestic price level must fall
  4. Foreign currencies become less expensive to residents

Answer: B. Exports become cheaper to foreign buyers and imports dearer to residents

Devaluation lowers the foreign-currency price of domestic exports and raises the domestic-currency cost of imports, other things equal.

5. Which function is most closely associated with the International Monetary Fund?
  1. Financing the construction of individual household homes
  2. Setting the prices of all commodities traded worldwide
  3. Providing temporary financial assistance to members facing balance-of-payments difficulties
  4. Administering national elections in member states

Answer: C. Providing temporary financial assistance to members facing balance-of-payments difficulties

The IMF provides financial support and policy assistance to member countries experiencing balance-of-payments problems.

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