Neco 2019 Economics Question 8

Practice essay / theory question 8 from the 2019 Neco Economics examination. This question covers Money Supply, Money Multiplier, Reserve Requirement, Open Market Operations .

Neco 2019 Economics Essay / Theory

Topics: Money Supply Money Multiplier Reserve Requirement Open Market Operations

Question 8 NECO • 2019 • ECONOMICS • essay

The Central Bank of Nigeria has the following monetary data for the current quarter:\n\n- Reserve requirement ratio (RRR) = 10%\n- Currency‑to‑deposits ratio (c) = 0.25 (i.e., the public holds 25% of bank deposits as cash)\n- Initial monetary base (MB) = ₦2,000 billion\n- The Central Bank conducts an open‑market sale of government securities worth ₦500 billion.\n\nUsing this information, answer the questions below.

Question Parts

( a )

Calculate the money multiplier before the open‑market sale.

( b )

Determine the change in the money supply resulting from the sale of securities, assuming no change in other variables.

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About This Question

This is Neco 2019 Economics Question 8. It is one of the essay questions from the 2019 Neco Economics examination.

The question covers Money Supply, Money Multiplier, Reserve Requirement, Open Market Operations .

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