Economics Exam Questions for SS2 First Term with Answers

You’re welcome to our school exams series where we provide you with termly examination questions in different subjects. In today’s post, we will focus on Economics exam questions. We will cover Economics exam questions for SS2 First term with answers. This means that we’ll be providing you with answers to the questions at the end. Also, you will get a few success tips on how to pass Economics examinations with flying colors. Remember to use the comments sections if you have questions, and don’t forget to join our Free Online Tutorial Classes on YouTube. (Subscribe to the Channel)

Introduction to Economics as a School Subject

Before we venture into Past Economics Exam Questions for SS2 First term, here’s a brief introduction to the subject:

Economics is a social science that studies how individuals, firms, and governments make choices in the face of limited resources to satisfy their unlimited wants. In secondary school, Economics helps students understand everyday issues such as production, consumption, distribution, and how money and resources flow within an economy.

Through the study of Economics, students learn about important concepts like demand and supply, market structures, inflation, unemployment, and international trade. It also equips them with analytical and problem-solving skills needed to make sound financial and business decisions in real life.

In essence, Economics as a school subject lays the foundation for understanding how the economy works and prepares students for advanced studies in business, finance, management, and other related fields.

Economics Exam Questions for SS2 First Term

Economics Exam Questions for SS2 First Term are divided into two sections:

• Section A
• Section B

The first section, namely, Section A is the objective test, and students are expected to attempt all questions in the section. Section B is the theory part, and students are expected to follow specific instruction and answer the required number of questions.

Note that what you have below are SS2 Economics First Term Exam Past Questions made available to assist students in their revision for 1st term examinations and also teachers in structuring standard examinations.

SECTION A: Objectives

Instruction: Answer all questions in this section by choosing from the options lettered A—D. Each question carries equal marks.

1. Which of the following best describes real GDP?
A. GDP measured at current market prices
B. GDP adjusted for inflation (measured in constant prices)
C. The value of only goods produced in the domestic agricultural sector
D. Government revenue only

2. In an open economy, fiscal expansion (higher government spending) financed by borrowing will typically cause, all else equal,
A. lower interest rates and increased private investment
B. higher interest rates and possible crowding out of private investment
C. no change in interest rates
D. immediate fall in the exchange rate to zero

3. Which of the following statements about public debt is correct?
A. Public debt is always bad and has no benefits
B. Public debt can finance development projects but may create repayment obligations
C. Public debt does not affect future generations
D. Public debt is the same as private debt

4. A natural monopoly arises when
A. many small firms can produce efficiently
B. a single firm can supply the entire market at lower cost than several firms
C. the government bans competition
D. firms collude illegally

5. Which of the following is a consequence of rapid population growth on development?
A. Reduced pressure on education services
B. Increased demand for jobs and services
C. Immediate rise in per-capita income
D. Lower demand for housing

6. The concept of price elasticity of demand measures how much quantity demanded responds to a change in
A. income       B. price
C. supply        D. technology

7. Which of the following increases a firm’s short-run supply?
A. An increase in input prices
B. A fall in production technology
C. An improvement in production technology
D. Higher business taxes

8. A transfer payment is
A. payment for goods and services
B. a payment made without receiving goods or services in return (eg, social welfare)
C. a capital investment
D. a loan

9. In monopolistic competition, products are
A. identical
B. homogeneous
C. differentiated
D. impossible to differentiate

10. The opportunity cost of producing one good is best measured by
A. the money spent to produce it
B. the quantity of the other good forgone
C. the time it takes to produce
D. public opinion

11. A laissez-faire economic system is most associated with
A. central planning
B. minimal government intervention in the economy
C. heavy nationalization
D. fixed prices

12. The balance of trade records the
A. flow of financial assets
B. difference between exports and imports of goods
C. total national debt
D. government budget surplus

13. In the labour market, a minimum wage set above equilibrium will typically cause
A. shortage of workers
B. surplus of labour (unemployment)
C. no change
D. increased equilibrium employment

14. The main cause of structural unemployment is
A. short-term search for jobs
B. mismatch between workers’ skills and job requirements
C. seasonal shifts in demand
D. temporary illness

15. Which of the following is an example of human capital?
A. Machinery
B. Education and skills of workers
C. Land
D. Raw materials

16. The Consumer Price Index (CPI) measures changes in the
A. value of money only
B. average price level of a fixed basket of consumer goods and services
C. total production of an economy
D. unemployment rate

17. Which policy would most directly reduce inflation caused by demand-pull?
A. Expansionary fiscal policy
B. Contractionary monetary policy
C. Increasing subsidies
D. Reducing taxes

18. Exchange rate depreciation makes imports
A. cheaper and exports dearer
B. more expensive and exports more competitive
C. unchanged
D. illegal

19. The concept of diminishing returns applies when adding more of a variable factor to fixed factors leads to
A. increasing marginal returns forever
B. constant marginal returns
C. eventually decreasing marginal returns
D. immediate negative returns

20. The short-run is defined as a period in which at least one factor of production is
A. variable
B. fixed
C. zero
D. infinitely flexible

21. A tariff is best defined as
A. a tax on exports
B. a tax on imports
C. a quota on imports
D. a subsidy to local producers

22. If cross-price elasticity between two goods is positive, the goods are
A. complements
B. substitutes
C. unrelated
D. inferior goods

23. A public good is characterized by being
A. excludable and rivalrous
B. non-excludable and non-rivalrous
C. excludable and non-competitive
D. provided only by private firms

24. The main objective of fiscal policy is to
A. control the money supply only
B. regulate prices only
C. influence economic activity through government revenue and spending
D. set interest rates

25. The marginal utility of a good is the change in
A. total utility when consumption changes by one unit
B. price when demand changes
C. quantity supplied when price changes
D. total revenue when price changes

26. Which of the following is a supply-side policy to reduce unemployment?
A. Increasing unemployment benefits
B. Introducing vocational training
C. Increasing payroll taxes
D. Raising minimum wage

27. An implicit cost is best described as
A. an out-of-pocket payment
B. a direct monetary expense
C. the opportunity cost of resources owned by the firm
D. government tax

28. A decrease in supply, with demand unchanged, leads to
A. lower equilibrium price and higher quantity
B. higher equilibrium price and lower quantity
C. lower price and lower quantity
D. higher price and higher quantity

29. The law of demand states that, ceteris paribus, when price of a commodity falls, quantity demanded will
A. increase
B. decrease
C. remain unchanged
D. become zero

30. A perfectly competitive firm is a price
A. maker       B. taker
C. leader       D. discriminator

31. Which of the following increases labour supply?
A. An increase in wage rate
B. A decrease in working-age population
C. Higher unemployment benefits
D. Restrictive immigration policy

32. Production covers all the following EXCEPT when
A. utility is created
B. a good is manufactured
C. a commodity is consumed
D. individual wants are satisfied

33. Productive resources are also called
A. principles of production
B. factors of production
C. items of production
D. labour and material resources only

34. Which of the following is NOT a feature of monopoly?
A. The seller can set price
B. Buyers and sellers are price takers
C. Entry by new firms is restricted
D. There is only one seller of the commodity

35. Which is the main likely outcome of trade union interference with wages (holding other factors constant)? Wages are
A. lowered while employment remains unchanged
B. lowered and employment increases
C. increased while employment remains unchanged
D. increased while employment is reduced

36. In the long run, factors of production are considered to be
A. fixed          B. at maximum
C. variable     D. increasing

37. The three sectors of a simple economy are typically
A. banks, schools and hospitals
B. workers, producers and marketers
C. households, firms and government
D. producers, retailers and wholesalers

38. In which market can a firm normally earn supernormal (economic) profit in both the short run and the long run?
A. Monopoly
B. Duopoly
C. Oligopoly
D. Perfect competition

39. A market structure where profit is maximized when marginal revenue, marginal cost and price are equated describes
A. perfect competition
B. monopoly
C. oligopoly
D. monopolistic competition

40. When marginal product is negative, the total product will be
A. constant
B. at a maximum
C. increasing
D. decreasing

41. If a firm’s price is less than average cost but greater than average variable cost, the firm is covering
A. all of its fixed and variable cost
B. all of its fixed cost and part of its variable cost
C. all of its variable cost and part of its fixed cost
D. part of its fixed cost and part of its variable cost

42. The allocation of goods and services in a free-market economy is primarily performed by
A. the price system
B. the banking system
C. a central planning body
D. government

43. One major problem facing industrial development in many West African countries is
A. inadequate large markets
B. inadequate infrastructure
C. inadequate supply of labour
D. unavailability of natural resources

44. The type of monopoly that develops as a result of granting patent rights is called
A. natural monopoly
B. state monopoly
C. legal monopoly
D. discriminating monopoly

45. Points outside a production possibility curve indicate
A. unattainable production levels with current resources and technology
B. attainable production levels
C. inefficient but attainable production levels
D. optimum production levels

46. Which statement about total and marginal utility is correct?
A. As total utility increases, marginal utility also increases
B. Marginal utility is always zero whenever total utility reaches its maximum
C. Total utility is at maximum whenever marginal utility is at its minimum
D. There is no relationship between total utility and marginal utility

47. Which of the following is NOT a strong basis for a trade union’s demand for higher wages?
A. Company is making higher profit
B. Productivity of the worker has increased
C. Union members have high qualifications
D. The commodity produced is not essential

48. The movement of labour from one grade to an entirely different grade is an example of
A. industrial labour mobility
B. horizontal occupational mobility
C. vertical occupational mobility
D. geographical mobility

49. The criteria for identifying an economic system include all the following EXCEPT
A. ownership of resources
B. scarcity of resources
C. method of decision making
D. motivation for production

50. In economics, a market is best defined as any
A. agreement made for consumers to buy all they need
B. agreement to sell commodities at low prices
C. arrangement made for producers to sell all their goods
D. arrangement whereby buyers and sellers interact to exchange goods and services

51. Which of the following measures will NOT encourage industrialization in West Africa?
A. Nationalization of all industries
B. Provision of social infrastructure
C. Giving tax incentives to infant industries
D. Using tariffs to discourage certain imports

52. Perfect knowledge of events in a perfect market is aided by the existence of
A. many buyers and sellers
B. homogeneous products
C. reliable means of communication
D. large numbers of traders

53. Cyclical unemployment is associated with
A. inadequate information
B. trade (business) fluctuations
C. structural changes in the economy
D. seasonal changes

54. Profit of a producer is the difference between
A. total cost and marginal cost
B. total revenue and total cost
C. average cost and total cost
D. price and total cost

55. Production in firms and industries is NOT influenced by
A. availability of raw materials
B. existence of other firms
C. nearness to the source of money supply
D. government policy

56. Which of the following will increase the demand for labour?
A. Increase in the wage rate
B. Increase in demand for the firm’s output
C. Lower wage rate
D. Lower marginal productivity of labour

57. Frictional unemployment occurs when
A. there is a change in production techniques
B. job seekers lack information about existing vacancies
C. bad weather prevents workers from commuting
D. job seekers have disabilities

58. Which cost curve is NOT U-shaped?
A. Marginal cost curve
B. Average fixed cost curve
C. Average total cost curve
D. Average variable cost curve

59. Which of the following is an economic activity?
A. Attending a town meeting
B. Visiting a stadium
C. Payment of school fees
D. Arresting a petty thief

60. An industry is best described as
A. firms that sell a set of closely related commodities
B. a factory that produces different product lines
C. a group of firms that produce and sell closely related products
D. an industrial concern involved in production and selling

Read Also: Economics Exam Questions for SS2 Third Term

SECTION B: Essay

INSTRUCTION – Answer all five (5) questions in this section.

1. (a) Define national income and state two common methods of measuring it
(b) Explain how fiscal policy can be used to (i) reduce unemployment, and (ii) control inflation Give real-world examples or hypothetical scenarios
(c) Describe two monetary policy tools and explain how each affects aggregate demand
(d) Discuss briefly the possible conflicts between fiscal policy objectives (for example, between stimulating growth and controlling inflation) and how a government might manage these conflicts

2. (a) Define unemployment
(b) State and explain five types of unemployment, giving examples where appropriate
(c) (i) Define wages (ii) Discuss five factors that cause variations in wages between occupations or industries

3. (a) Define: (i) labour market; (ii) demand for labour
(b) Explain four factors that affect the demand for labour
(c) Discuss four factors affecting the efficiency/productivity of labour
(d) Define the mobility of labour and explain the difference between geographical and occupational mobility

4. (a) Define a market
(b) Explain four characteristics of perfect competition
(c) Explain four advantages and three disadvantages of monopoly
(d) With the aid of a labeled diagram, show how a monopolist can earn supernormal profit in the short run Explain the diagram in words

5. (a) What is capitalism?
(b) State and explain five main features of capitalism
(c) Explain four advantages and four disadvantages of a socialist economic system
(d) State and explain four advantages and two disadvantages of a mixed economic system
(e) Explain any three methods (weapons) that trade unions can use during an industrial dispute, and discuss one possible advantage and one possible disadvantage of each method

6. The table below shows possible combinations of Military Goods and Civilian Goods produced by a country with available resources and technology

Military goods (tons) — Civilian goods (tons)
0 — 200
20 — 160
40 — 120
60 — 80
80 — 40
100 — 0

(a) Draw and label the production possibility curve (PPC) for the data above
(b) On your diagram, indicate one point that is unattainable with current resources and label it S, and indicate one point inside the curve that shows inefficient use of resources and label it K. (Describe why S is unattainable and K inefficient)
(c) Identify two points on the curve that show efficient production
(d) Explain what the downward slope of the PPC indicates
(e) Discuss why production at point S is not feasible using the concept of scarcity and resource constraints

Remember to use the comments sections if you have questions, and don’t forget to join our Free Online Tutorial Classes on YouTube. (Subscribe to the Channel)

Answers to Economics Exam Questions for SS2 First Term

Answers to Section A (Objective Test)

The following table gives the correct answers to the objective section of Economics exam questions for SS2 First term. If you are using a mobile device, hold the table and scroll to the right or left for a complete view.

So here you have the answers to the objective section of Economics Exam Questions for SS2 First term. Use the comments section to let me know if you have any questions you would want me to clarify or discuss further.

Answers to Section B (Theory)

Answers to Question 1.

(a) National income is the total value of all goods and services produced by a country within a specific period, usually one year. It measures the overall economic performance of a nation.
Two common methods of measuring it are:

• Income Method: Adds up all incomes earned by individuals and firms, such as wages, rent, interest, and profits.
• Expenditure Method: Adds up all spending on final goods and services, including consumption, investment, government expenditure, and net exports.

(b) Using fiscal policy to reduce unemployment and control inflation
(i) To reduce unemployment, the government can increase public spending or cut taxes. For instance, building new roads and schools creates jobs directly and indirectly.
(ii) To control inflation, the government can reduce its spending or increase taxes to withdraw excess money from the economy. For example, if inflation rises due to excessive demand, higher taxes will reduce disposable income and cool the economy.

(c) Two monetary policy tools and their effects on aggregate demand

• Open Market Operations: When the central bank sells government securities, it reduces the money supply, leading to lower aggregate demand. Buying securities increases the money supply and raises aggregate demand.
• Bank Rate Policy: Increasing the lending rate discourages borrowing and reduces spending (aggregate demand), while lowering it encourages borrowing and raises aggregate demand.

(d) Conflicts between fiscal policy objectives
A government trying to stimulate economic growth through higher spending may trigger inflation, while efforts to reduce inflation through spending cuts can slow growth and raise unemployment. To manage this, governments often use a balanced mix of fiscal and monetary policies — for instance, increasing productive investment while maintaining moderate interest rates to control inflation.

Answers to Question 2.

(a) Unemployment is a situation where people who are willing and able to work at the prevailing wage rate cannot find jobs.

(b) Types of Unemployment

• Frictional Unemployment: Occurs when workers are temporarily between jobs or searching for new ones.
• Structural Unemployment: Caused by changes in technology or industrial structure that make certain skills obsolete.
• Seasonal Unemployment: Happens when workers are unemployed at certain seasons of the year, e.g., farmworkers during dry season.
• Cyclical Unemployment: Results from a downturn in economic activity or recession.
• Voluntary Unemployment: When individuals choose not to work at the prevailing wage rate.

(c) (i) Wages are payments made to workers for their labor, usually on a weekly or monthly basis.

(ii) Factors causing wage variations

• Differences in skills and qualifications
• Nature of the job (hazardous or easy)
• Demand and supply of labor in different industries
• Government regulations and minimum wage laws
• Bargaining power of trade unions

Answers to Question 3.

(a) (i) Labour market is a place or system where employers and workers interact for the purpose of hiring and employment.
(ii) Demand for labour refers to the number of workers employers are willing to hire at a given wage rate.

(b) Factors affecting demand for labour

• Wage rate
• Productivity of labour
• Demand for goods and services
• Level of technology

(c) Factors affecting efficiency of labour

• Education and training
• Health and working conditions
• Availability of tools and machinery
• Level of motivation and wages

(d) Mobility of labour means the ability of workers to move from one job or place to another.
Geographical mobility is movement from one location to another (e.g., Lagos to Abuja).
Occupational mobility is the ability to move from one type of job to another (e.g., from a teacher to a banker).

Answers to Question 4.

(a) A market is a system or arrangement where buyers and sellers meet to exchange goods and services.

(b) Characteristics of perfect competition

• Large number of buyers and sellers
• Homogeneous products
• Free entry and exit
• Perfect knowledge of the market

(c) Advantages of monopoly

• Economies of scale
• Encourages research and innovation
• Stable prices due to control
• Can provide essential services efficiently

Disadvantages of monopoly

• High prices for consumers
• Restricted output
• Lack of consumer choice

(d) Diagram showing supernormal profit

The monopolist produces where MR = MC and charges price P at output Q, earning supernormal profit represented by the shaded area between average cost (AC) and average revenue (AR).

Answers to Question 5.

(a) Capitalism is an economic system where resources and means of production are owned and controlled by private individuals for profit.

(b) Features of Capitalism

• Private ownership of property
• Freedom of enterprise
• Profit motive
• Competition
• Price mechanism determines allocation

(c) Advantages of Socialism

• Eliminates income inequality
• Ensures full employment
• Provides social welfare
• Promotes economic stability

Disadvantages of Socialism

• Lack of incentives
• Government inefficiency and bureaucracy
• Possible abuse of power
• Slow decision-making

(d) Advantages of Mixed Economy

• Combines efficiency with social welfare
• Reduces income inequality
• Encourages both private and public participation
• Provides stability and control

Disadvantages of Mixed Economy

• Government interference may discourage private sector
• Possible corruption in public enterprises

(e) Trade Union Methods in Industrial Dispute

• Strike: Workers stop work to press demands. Advantage — draws attention; Disadvantage — loss of income.
• Work-to-rule: Employees do only what is required. Advantage — peaceful protest; Disadvantage — slows productivity.
• Go-slow: Workers deliberately reduce speed. Advantage — pressures management; Disadvantage — may harm output.

Answers to Question 6.

(a) Production Possibility Curve (PPC)

The PPC shows the different combinations of two goods (Military and Civilian goods) that a country can produce using its available resources efficiently.

(b) Point S lies outside the curve and is unattainable with current resources; point K lies inside the curve and indicates inefficient use of resources.

(c) Points such as (40,120) and (60,80) on the curve show efficient production.

(d) The downward slope of the PPC indicates that producing more of one good means producing less of another — demonstrating opportunity cost.

(e) Production at point S is not feasible because resources are scarce and limited. No economy can produce beyond its capacity without new technology or increased resources.

How to Pass Economics Exam Questions for SS2 First Term

Passing your Economics exam questions for SS2 First term requires a combination of preparation, understanding, and strategy. Here are actionable tips to help you excel:

How to Pass Economics Exam Questions for SS2 First Term

To pass your SS2 First Term Economics exam, you must study smartly and understand both theory and application. Economics is a subject that requires clear understanding of concepts, not just memorization. Below are useful tips to help you succeed:

• Master Key Concepts: Begin by understanding important topics like national income, unemployment, market structures, and economic systems. Don’t just cram definitions—learn how each concept applies in real-world situations.
• Study Past Questions: Go through previous exam papers to identify frequently asked questions. This will help you focus on what examiners emphasize and practice answering them in your own words.
• Draw and Label Diagrams Clearly: Many Economics questions require diagrams such as the Production Possibility Curve or Monopoly graph. Ensure your diagrams are neat, correctly labeled, and well-explained.
• Relate Theories to Current Events: Use simple examples from your country’s economy when explaining concepts like inflation, unemployment, or fiscal policy. This shows deep understanding and earns you more marks.
• Revise Definitions and Formulas: Economics contains key terms and formulas (e.g., national income, demand and supply). Learn their meanings and how to apply them to questions correctly.
• Practice Writing Full Answers: Essay questions in Economics require well-organized points. Practice writing answers with clear introductions, explanations, and short conclusions.
• Manage Your Time During Exams: Answer questions you know best first. Don’t spend too much time on one question—spread your time wisely across all sections.
• Stay Calm and Read Instructions Carefully: Always read each question twice before answering. Understand what is required—whether to define, list, explain, or discuss.

Finally, maintain a positive attitude. Consistent reading, practicing diagrams, and understanding real-life economic issues will give you the confidence to perform excellently in your SS2 First Term Economics exam.

It’s a wrap!

If you need more clarification on SS2 First Term Questions on Economics, you can use the comments box below. We’ll be there to answer you asap. Don’t forget to join our Free Online Tutorial Classes on YouTube. (Subscribe to the Channel)

Best wishes…