POST UTME COVENANT UNIVERSITY 2025 Economics | Objective

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Question 1
The Central Bank of Nigeria (CBN) uses the monetary policy instrument of Open Market Operations (OMO) to increase the money supply in the economy. What is the primary effect of OMO on the money supply?
A. Increase the reserve requirement of commercial banks
B. Sell government securities to commercial banks
C. Increase the money supply by injecting liquidity into the economy
D. Decrease the money supply by absorbing liquidity from the economy
Question 2
The demand for a commodity is given by the equation Q = 100 - 2P, where Q is the quantity demanded and P is the price. If the price is increased by 10%, what is the new quantity demanded?
A. 80
B. 90
C. 100
D. 110
Question 3
A consumer is faced with a budget constraint of ₦100. The consumer's indifference curve is downward-sloping. What is the consumer's optimal bundle of goods?
A. The consumer will choose the bundle with the highest utility
B. The consumer will choose the bundle with the lowest price
C. The consumer will choose the bundle with the highest quantity
D. The consumer will choose the bundle with the lowest quantity
Question 4
A country's inflation rate is 5%. What does this indicate about the country's monetary policy?
A. The country's central bank is tightening monetary policy
B. The country's central bank is loosening monetary policy
C. The country's monetary policy is neutral
D. The country's monetary policy is uncertain
Question 5
A firm's production function is given by Q = 2L^0.5K^0.5. If the firm's current input levels are L = 4 and K = 9, then the marginal product of capital (MPK) is
A. 2
B. 4
C. 6
D. 8
Question 6
A firm is considering the production of a new product. The \cost function is given by C = 100 + 2Q, where C is the total \cost and Q is the quantity produced. If the firm produces 50 units of the product, what is the total \cost?
A. ₦1500
B. ₦2000
C. ₦2500
D. ₦3000
Question 7
A country's balance of payments (BOP) is in surplus. What does this indicate about the country's trade balance?
A. The country is exporting more than it is importing
B. The country is importing more than it is exporting
C. The country's trade balance is in equilibrium
D. The country's trade balance is uncertain
Question 8
A consumer's indifference curve is downward-sloping. What does this indicate about the consumer's preferences?
A. The consumer is willing to trade off one good for another
B. The consumer has a fixed budget constraint
C. The consumer is indifferent between the two goods
D. The consumer has a perfect substitute for one good
Question 9
In a perfectly competitive market, the demand curve for a firm's product is its
A. marginal revenue curve
B. marginal \cost curve
C. average revenue curve
D. average \cost curve
Question 10
A consumer has the following indifference curves: IC1: 2U + 3V = 6, IC2: 2U + 3V = 9. If the consumer is initially at point (2, 1) on IC1, and then moves to point (3, 2) on IC2, then the consumer's utility has
A. increased by 1 unit
B. increased by 2 units
C. decreased by 1 unit
D. decreased by 2 units
Question 11
The production possibilities curve (PPC) is a graphical representation of the trade-offs between two goods. If a country is operating on the PPC, what is the opportunity \cost of producing more of one good?
A. The \cost of producing the alternative good
B. The \cost of not producing the alternative good
C. The \cost of producing the chosen good
D. The \cost of not producing the chosen good
Question 12
A firm's production function is given by Q = 100K^0.5L^0.5, where Q is the output, K is the capital and L is the labor. If the firm wants to increase its output by 10%, what percentage increase in capital and labor is required?
A. 5% increase in capital and 5% increase in labor
B. 10% increase in capital and 10% increase in labor
C. 15% increase in capital and 15% increase in labor
D. 20% increase in capital and 20% increase in labor
Question 13
A consumer's indifference curve is given by the equation ( u(x,y) = 2x + 3y ). If the consumer's income is ₦1000 and the prices of x and y are ₦5 and ₦3 respectively, find the consumer's optimal bundle of x and y.
A. x = 80, y = 40
B. x = 60, y = 60
C. x = 40, y = 80
D. x = 20, y = 100
Question 14
The balance of payments (BOP) accounts record all international transactions between a country and the rest of the world. Which of the following is NOT a component of the BOP accounts?
A. Current account
B. Capital account
C. Financial account
D. Goods and services account
Question 15
A country's GDP is ₦10 trillion, its GNP is ₦12 trillion, and its net factor income from abroad is ₦2 trillion. Find the country's net national product.
A. ₦14 trillion
B. ₦16 trillion
C. ₦18 trillion
D. ₦20 trillion

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