Waec Model Questions Vol1 2020 Economics Question 7

Practice essay / theory question 7 from the 2020 Waec Model Questions Vol1 Economics examination. This question covers National Income .

Waec Model Questions Vol1 2020 Economics Essay / Theory

Topic: National Income

Question 7 WAEC_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • essay

The table below shows Nigeria’s nominal Gross Domestic Product (GDP) and the GDP deflator for the years 2021 and 2022. In 2022 the government increased its spending on infrastructure by ₦2 trillion, financed through borrowing. | Year | Nominal GDP (₦ trillion) | GDP Deflator (index) | |------|--------------------------|----------------------| | 2021 | 30 | 120 | | 2022 | 36 | 130 | Assume the marginal propensity to consume (MPC) is 0.75 and that there is no crowding‑out of private investment.

Question Parts

( a )

Calculate the real GDP for each year and the real‑GDP growth rate between 2021 and 2022.

( b )

Using the given MPC, compute the Keynesian multiplier. Then estimate the change in equilibrium national income that results from the additional government spending, assuming no crowding‑out.

( c )

Discuss two major limitations of using real GDP as a measure of the welfare of a nation’s citizens.

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About This Question

This is Waec Model Questions Vol1 2020 Economics Question 7. It is one of the essay questions from the 2020 Waec Model Questions Vol1 Economics examination.

The question covers National Income .

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