Gce Model Questions Vol1 2025 Economics Question 7

Practice essay / theory question 7 from the 2025 Gce Model Questions Vol1 Economics examination. This question covers National Income .

Gce Model Questions Vol1 2025 Economics Essay / Theory

Topic: National Income

Question 7 GCE_MODEL_QUESTIONS_VOL1 • 2025 • ECONOMICS • essay

A developing economy is analysing the determinants of its national income. The following macro‑economic data are given: - Consumption function: C = 200 + 0.8(Y – T) - Investment: I = 150 - Government expenditure: G = 100 - Tax function: T = 0.2Y - Exports: X = 50 - Imports: M = 0.1Y All values are expressed in millions of naira. Answer the questions that follow.

Question Parts

( a )

Define national income and list its major components in the expenditure approach.

( b )

Using the data supplied, calculate the equilibrium level of national income (Y). Show all steps of your calculation.

( c )

The government decides to increase its expenditure by ₦50 million. Determine the new equilibrium national income and the change in Y, using the appropriate multiplier derived from the data.

( d )

Discuss two limitations of applying the simple expenditure multiplier analysis to the Nigerian economy.

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About This Question

This is Gce Model Questions Vol1 2025 Economics Question 7. It is one of the essay questions from the 2025 Gce Model Questions Vol1 Economics examination.

The question covers National Income .

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