Waec Model Questions Vol1 2025 Economics Question 4
Practice objective / multiple choice question 4 from the 2025 Waec Model Questions Vol1 Economics examination.
The nominal interest rate is 12%. Expected inflation is initially 8% and later rises to 10%. The real interest rate follows the Fisher relation \(r = i - \pi^e\). Investment is given by \(I = I_0 - b\,r\), where \(I_0 = 500\) (billion Naira) and \(b = 30\) (billion Naira per percentage point). The multiplier for the economy is 2.5. By how many billions of Naira does equilibrium output increase when expected inflation rises from 8% to 10%?
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About This Question
This is Waec Model Questions Vol1 2025 Economics Question 4. It is one of the objective questions from the 2025 Waec Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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