NECO 2025/2026 Economics Objective and Essay Questions and Answers
NECO 2025/2026 Economics – Objective & Essay
SECTION A: Objective Questions (1–50)
Instructions: Choose the correct option A–D that best answers each question.
-
The basic problem of economics is —
A. money
B. inflation
C. scarcity
D. production
Answer: C -
The satisfaction derived from consuming one more unit of a good is called —
A. total utility
B. marginal utility
C. average utility
D. utility maximization
Answer: B -
What is the study of individual units in an economy called?
A. macroeconomics
B. national economics
C. microeconomics
D. public finance
Answer: C -
Which of these is not a factor of production?
A. Land
B. Capital
C. Interest
D. Labour
Answer: C -
The reward for capital is —
A. rent
B. profit
C. wage
D. interest
Answer: D -
An example of a free good is —
A. rice
B. air
C. sugar
D. bread
Answer: B -
The difference between the value of exports and imports is —
A. trade surplus
B. balance of trade
C. balance of payment
D. net trade
Answer: B -
Demand that arises due to demand for another product is —
A. composite demand
B. derived demand
C. joint demand
D. competitive demand
Answer: B -
What is the formula for calculating price elasticity of demand?
A. %ΔQ / %ΔP
B. %ΔP / %ΔQ
C. Q × P
D. Q / P
Answer: A -
A market structure with only one seller is —
A. monopoly
B. duopoly
C. oligopoly
D. perfect competition
Answer: A -
Which of the following is not a function of money?
A. Store of value
B. Standard of deferred payment
C. Means of exchange
D. Inflation control
Answer: D -
A demand curve slopes —
A. downward to the left
B. downward to the right
C. upward to the right
D. vertically
Answer: B -
The price at which quantity demanded equals quantity supplied is —
A. maximum price
B. equilibrium price
C. minimum price
D. marginal cost
Answer: B -
In a mixed economy, ownership of resources is —
A. purely private
B. purely public
C. both public and private
D. by government only
Answer: C -
The central bank does all the following except —
A. printing money
B. giving loans to individuals
C. issuing currency
D. controlling inflation
Answer: B -
A budget deficit occurs when —
A. revenue = expenditure
B. revenue > expenditure
C. revenue < expenditure
D. all capital projects are completed
Answer: C -
The total output of goods and services in a country is —
A. balance of trade
B. national income
C. inflation
D. interest rate
Answer: B -
Recurrent expenditure refers to —
A. one-time government expenses
B. capital projects
C. regular and ongoing expenses
D. foreign loans
Answer: C -
Which of the following is not an economic activity?
A. Teaching
B. Farming
C. Sleeping
D. Trading
Answer: C -
Which of these is a direct tax?
A. Value Added Tax
B. Excise duty
C. Personal income tax
D. Import duty
Answer: C -
Which of the following improves a country’s balance of payments?
A. Excessive imports
B. Borrowing
C. Increase in exports
D. Payment of debts
Answer: C -
The invisible hand theory was propounded by —
A. J.S. Mill
B. John Keynes
C. Adam Smith
D. Karl Marx
Answer: C -
When supply is greater than demand, it leads to —
A. shortage
B. equilibrium
C. surplus
D. inflation
Answer: C -
The location of a factory close to raw materials is to —
A. reduce wages
B. reduce transportation cost
C. attract more customers
D. increase rent
Answer: B -
When average cost equals marginal cost, the firm is at —
A. shutdown point
B. minimum average cost
C. maximum output
D. equilibrium
Answer: B
NECO 2025/2026 Economics Objective and Essay Questions and Answers
-
A firm’s main aim in a perfectly competitive market is to —
A. increase sales
B. minimize cost
C. maximize profit
D. grow market share
Answer: C -
An economic system where all resources are owned and controlled by the government is —
A. mixed economy
B. capitalist economy
C. socialist economy
D. traditional economy
Answer: C -
Which of the following is an advantage of division of labour?
A. Increase in cost of production
B. Monotony of work
C. Increased productivity
D. Waste of time
Answer: C -
What does the term “effective demand” mean?
A. Desire for goods and services
B. Demand supported with ability to pay
C. Total demand for luxury goods
D. Demand without purchasing power
Answer: B -
In economics, wants are considered —
A. unlimited
B. fixed
C. few
D. predictable
Answer: A -
The agency that regulates monetary policy in Nigeria is —
A. Federal Inland Revenue Service
B. Ministry of Finance
C. Central Bank of Nigeria
D. Nigerian Stock Exchange
Answer: C -
What is the primary function of money?
A. Source of wealth
B. Store of interest
C. Medium of exchange
D. Credit creation
Answer: C -
Inflation that is caused by excessive aggregate demand is called —
A. cost-push inflation
B. demand-pull inflation
C. hyperinflation
D. stagflation
Answer: B -
A situation where a person is willing to work but cannot find a job is called —
A. underemployment
B. unemployment
C. redundancy
D. inflation
Answer: B -
All of the following are characteristics of money except —
A. durability
B. divisibility
C. perishability
D. portability
Answer: C -
Which of these is not a function of the Central Bank?
A. Issuing currency
B. Controlling commercial banks
C. Accepting deposits from individuals
D. Managing foreign reserves
Answer: C -
An advantage of indirect tax is that it —
A. is easy to evade
B. falls heavily on the poor
C. is collected at the point of sale
D. reduces savings
Answer: C -
Which of these is a component of national income?
A. Transfer payments
B. Rent
C. Loans
D. Imports
Answer: B -
Which of the following discourages saving in Nigeria?
A. High interest rate
B. High inflation rate
C. Efficient banking system
D. Security of deposits
Answer: B -
The reward for entrepreneurship is —
A. profit
B. wage
C. interest
D. rent
Answer: A -
The market structure where there are few sellers is called —
A. monopoly
B. perfect competition
C. oligopoly
D. duopoly
Answer: C -
The difference between GDP and GNP is —
A. depreciation
B. net income from abroad
C. government spending
D. foreign exchange
Answer: B -
The total amount of goods and services demanded in an economy is called —
A. national income
B. effective demand
C. aggregate demand
D. marginal utility
Answer: C -
All of the following are types of utility except —
A. form utility
B. time utility
C. place utility
D. demand utility
Answer: D -
A downward sloping demand curve shows that —
A. as price increases, demand increases
B. as price increases, demand remains constant
C. as price decreases, demand increases
D. there is a direct relationship between price and demand
Answer: C -
What type of tax takes a higher percentage from the rich than from the poor?
A. Regressive tax
B. Flat tax
C. Proportional tax
D. Progressive tax
Answer: D -
The basic feature of a barter system is —
A. use of money
B. exchange of goods for goods
C. availability of coin
D. centralized banking
Answer: B -
Nigeria’s major foreign exchange earner is —
A. agriculture
B. tourism
C. crude oil
D. manufacturing
Answer: C -
A table showing quantity supplied at different prices is called —
A. price table
B. supply curve
C. supply schedule
D. elasticity table
Answer: C -
A commodity whose demand increases as income increases is a —
A. normal good
B. inferior good
C. complementary good
D. capital good
Answer: A -
When average revenue equals marginal revenue, demand is —
A. elastic
B. inelastic
C. unitary elastic
D. perfectly elastic
Answer: C -
The body that formulates Nigeria’s fiscal policy is —
A. National Planning Commission
B. Central Bank of Nigeria
C. Federal Ministry of Finance
D. Federal Inland Revenue Service
Answer: C -
The movement along the supply curve is caused by a change in —
A. technology
B. cost of production
C. price of the product
D. government policy
Answer: C -
The term “terms of trade” refers to the —
A. ratio of imports to exports
B. quality of goods traded
C. balance of payments
D. difference between visible and invisible trade
Answer: A -
A situation where the government spends more than it earns is known as —
A. trade deficit
B. budget surplus
C. budget deficit
D. fiscal balance
Answer: C -
A major source of revenue for local governments in Nigeria is —
A. VAT
B. company tax
C. tenement rate
D. import duties
Answer: C -
The quantity of a good a seller is willing and able to sell at a given price is —
A. production
B. supply
C. demand
D. consumption
Answer: B -
An increase in demand with constant supply leads to —
A. a fall in price
B. equilibrium
C. an increase in price
D. inflation
Answer: C -
The excess of total revenue over total cost is called —
A. average profit
B. net income
C. gross profit
D. profit
Answer: D -
A country has comparative advantage when it —
A. can produce more of everything
B. has more population
C. can produce a good at a lower opportunity cost
D. has more resources than other countries
Answer: C
NECO 2025/2026 Economics Objective and Essay Questions and Answers
SECTION B: Essay Questions
Answer any four (4) questions. All questions carry equal marks.
Question 1:
(a) Define the term “opportunity cost”.
(b) Explain its importance in economic decision-making using an example.
Question 2:
(a) Define supply.
(b) List and explain four factors affecting supply.
(c) Draw a typical supply curve and label it appropriately.
Question 3:
(a) What is inflation?
(b) Explain three types of inflation.
(c) Mention four causes of inflation in Nigeria.
Question 4:
(a) What is national income?
(b) List and explain three methods of measuring national income.
(c) Mention three limitations of using national income as a measure of welfare.
Question 5:
(a) Define public finance.
(b) State three major sources of government revenue.
(c) Explain two reasons for taxation.
Question 6:
(a) What is labour?
(b) Differentiate between skilled and unskilled labour.
(c) Mention four factors affecting the efficiency of labour.