Neco 2023 Economics Question 17

Practice objective / multiple choice question 17 from the 2023 Neco Economics examination.

Neco 2023 Economics Objective / Multiple Choice Medium Difficulty
Question 17 NECO • 2023 • ECONOMICS • objective

In Country X, the Consumer Price Index (CPI) was 120 in 2020 (base year 2010 = 100), rose to 126 in 2021 and to 133 in 2022. A worker earned a nominal salary of N200,000 in 2020 and N220,000 in 2022. (i) Compute the average annual inflation rate over the period 2020‑2022. (ii) Compute the average annual nominal salary growth rate over the same period. (iii) Using the Fisher relation, determine the average annual real salary growth rate and state whether the worker's purchasing power increased or decreased.

Answer Options

A. Average annual inflation ≈ 6.1 %; average annual nominal salary growth ≈ 5.0 %; average annual real salary growth ≈ 1.1 % (purchasing power increased).
B. Average annual inflation ≈ 4.8 %; average annual nominal salary growth ≈ 5.2 %; average annual real salary growth ≈ -0.4 % (purchasing power decreased).
Correct Answer C. Average annual inflation ≈ 5.3 %; average annual nominal salary growth ≈ 4.9 %; average annual real salary growth ≈ -0.4 % (purchasing power decreased).
D. Average annual inflation ≈ 5.3 %; average annual nominal salary growth ≈ 4.9 %; average annual real salary growth ≈ 0.4 % (purchasing power increased).
Correct Answer
C
Correct Option:
Average annual inflation ≈ 5.3 %; average annual nominal salary growth ≈ 4.9 %; average annual real salary growth ≈ -0.4 % (purchasing power decreased).

About This Question

This is Neco 2023 Economics Question 17. It is one of the objective questions from the 2023 Neco Economics examination.

Difficulty level: Medium .

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