Waec Model Questions Vol1 2018 Economics Question 8

Practice essay / theory question 8 from the 2018 Waec Model Questions Vol1 Economics examination. This question covers Money and Banking .

Waec Model Questions Vol1 2018 Economics Essay / Theory
Topic: Money and Banking
Question 8 WAEC_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • essay

The following monetary data pertain to Nigeria in 2023.

Question Parts

( a )
The monetary base (MB) is ₦5,000 billion and the reserve‑requirement ratio (RR) is 5 %. Calculate the initial money multiplier and the corresponding money supply (M) before any policy change.
( b )
The central bank raises the reserve‑requirement ratio to 10 % while all other conditions remain unchanged. Compute the new money multiplier and the theoretical maximum money supply, ignoring the open‑market operation.
( c )
Simultaneously, the central bank sells government securities worth ₦2,000 billion to the public. Assuming the public does not change its currency holdings, estimate the net change in the money supply after both the reserve‑requirement increase and the open‑market operation. Show your reasoning.

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About This Question

This is Waec Model Questions Vol1 2018 Economics Question 8. It is one of the essay questions from the 2018 Waec Model Questions Vol1 Economics examination.

The question covers Money and Banking .

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