Waec Model Questions Vol1 2024 Economics Question 8

Practice essay / theory question 8 from the 2024 Waec Model Questions Vol1 Economics examination. This question covers Functions of Money, Money Supply Determination, Reserve Ratio, Currency‑Deposit Ratio, Monetary Policy Tools, Open Market Operations .

Waec Model Questions Vol1 2024 Economics Essay / Theory
Topics: Functions of Money Money Supply Determination Reserve Ratio Currency‑Deposit Ratio Monetary Policy Tools Open Market Operations
Question 8 WAEC_MODEL_QUESTIONS_VOL1 • 2024 • ECONOMICS • essay

Consider the following monetary data for Nigeria in 2024:

Question Parts

( a )
State and briefly explain the three primary functions of money in a modern economy.
( b )
The reserve requirement ratio set by the Central Bank is 15 %. The public holds a currency‑deposit ratio of 0.20. Calculate the money multiplier and the maximum potential increase in the money supply if the Central Bank injects ₦500 billion of new reserves into the banking system.
( c )
In March 2024 the Central Bank conducted an open‑market sale of ₦200 billion government securities. Discuss qualitatively how this operation affects (i) the money supply, (ii) the prevailing interest rate, and (iii) aggregate demand in the short run.
( d )
Given Nigeria’s persistent high inflation, evaluate the effectiveness of monetary policy tools (open‑market operations, reserve requirement, and discount rate) in curbing inflation, citing at least one structural challenge that limits their impact.

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About This Question

This is Waec Model Questions Vol1 2024 Economics Question 8. It is one of the essay questions from the 2024 Waec Model Questions Vol1 Economics examination.

The question covers Functions of Money, Money Supply Determination, Reserve Ratio, Currency‑Deposit Ratio, Monetary Policy Tools, Open Market Operations .

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