Frequently Asked Questions About This Topic
What are the likely NECO 2026/2027 Economics questions?
How do I score an A in NECO Economics?
What does the NECO Economics syllabus cover?
Introduction
Economics is a core subject for Commercial students and an optional one for others. It teaches you how individuals, businesses, and governments make choices with limited resources. Students who understand Economics well find it one of the more rewarding subjects to score high in because many of the answers are rooted in logical thinking rather than memorisation. This article covers 50 objective questions with answers and 5 theory questions based on what NECO regularly tests. Topics include supply and demand, national income, money and banking, international trade, and Nigeria’s economic history. Work through these questions honestly and time yourself as you go.
NECO Economics Syllabus Breakdown for 2026/2027
NECO Economics tests candidates on these key areas: Basic economic concepts including scarcity, choice, and opportunity cost. Demand and supply. Elasticity. Market structures such as monopoly, oligopoly, and perfect competition. National income and its measurement. Money, banking, and financial institutions. Labour and wages. Agriculture and industry in Nigeria. International trade and balance of payments. Population and economic development. Public finance and taxation.
50 Objective Questions and Answers
1. The central problem of economics arises because of:
A. Too many goods
B. Scarcity of resources ✓
C. Unlimited resources
D. Lazy workers
2. Opportunity cost is best defined as:
A. The total cost of producing a good
B. The next best alternative forgone ✓
C. The market price of a good
D. The cost of labour
3. When demand increases and supply remains constant, the price will:
A. Fall
B. Remain the same
C. Rise ✓
D. Fluctuate unpredictably
4. A perfectly elastic demand curve is:
A. Vertical
B. Horizontal ✓
C. Downward sloping
D. Upward sloping
5. Which of the following is NOT a factor of production?
A. Land
B. Labour
C. Money ✓
D. Capital
6. The price at which quantity demanded equals quantity supplied is called:
A. Market price
B. Equilibrium price ✓
C. Floor price
D. Ceiling price
7. Gross Domestic Product (GDP) measures:
A. Only government spending
B. Total value of goods and services produced within a country in a year ✓
C. Value of imports only
D. Total savings of households
8. A commercial bank is different from a central bank because it:
A. Issues currency
B. Deals directly with the public and takes deposits ✓
C. Sets interest rates
D. Controls money supply
9. When a country exports more than it imports, it has a:
A. Trade deficit
B. Trade surplus ✓
C. Balance of trade
D. Floating exchange rate
10. Which of the following is an example of a public good?
A. A car
B. A loaf of bread
C. Street lighting ✓
D. A movie ticket
11. The law of demand states that as price increases, quantity demanded:
A. Increases
B. Remains constant
C. Decreases ✓
D. Doubles
12. Inflation refers to:
A. A rise in the value of money
B. A persistent rise in the general price level ✓
C. Reduction in the quantity of goods
D. Fall in government revenue
13. Which body controls money supply in Nigeria?
A. NDIC
B. CBN ✓
C. FIRS
D. BOI
14. A consumer is in equilibrium when:
A. He buys as many goods as possible
B. Marginal utility equals price for each good bought ✓
C. He saves all his income
D. Total utility is zero
15. The concept of elasticity measures:
A. How quickly goods are produced
B. Responsiveness of demand or supply to a change in price ✓
C. The cost of production
D. The rate of economic growth
16. Which of the following is a characteristic of monopoly?
A. Many sellers
B. No close substitute for the product ✓
C. Free entry and exit
D. Homogeneous products
17. National income can be measured by the:
A. Export only method
B. Production, income, or expenditure method ✓
C. Tax collection method
D. GDP deflator method
18. Subsistence farming means:
A. Farming for export
B. Producing food mainly for the farmer’s own consumption ✓
C. Large-scale commercial farming
D. Irrigation farming
19. The reward for capital as a factor of production is:
A. Wages
B. Rent
C. Interest ✓
D. Profit
20. An increase in population growth rate in a developing country like Nigeria leads to:
A. Lower unemployment
B. Reduced pressure on social services
C. Higher demand for goods and services ✓
D. Faster industrialisation
21. Which of the following is an indirect tax?
A. Income tax
B. Capital gains tax
C. Value Added Tax (VAT) ✓
D. Corporate tax
22. A fall in the exchange rate of the naira means:
A. Naira buys more foreign currency
B. Nigerian exports become more expensive
C. Nigerian exports become cheaper to foreign buyers ✓
D. Imports become cheaper
23. The reward for entrepreneurship as a factor of production is:
A. Wages
B. Rent
C. Interest
D. Profit ✓
24. Which of the following is NOT a function of money?
A. Medium of exchange
B. Store of value
C. Standard of deferred payment
D. Means of production ✓
25. A budget deficit occurs when:
A. Government revenue exceeds expenditure
B. Government expenditure exceeds revenue ✓
C. Exports exceed imports
D. Imports fall sharply
26. Which type of unemployment arises from the time between leaving one job and finding another?
A. Structural
B. Seasonal
C. Frictional ✓
D. Cyclical
27. Price discrimination occurs when a seller charges:
A. The same price in all markets
B. Different prices for the same good in different markets ✓
C. Below cost price
D. The government-regulated price
28. The multiplier effect in economics refers to:
A. The impact of tax cuts on the rich
B. The chain effect of an initial increase in spending on total income ✓
C. The effect of interest rate on savings
D. Price changes in monopoly markets
29. Which of the following is a visible trade item?
A. Insurance services
B. Tourism
C. Export of crude oil ✓
D. Banking services
30. The Malthusian theory of population states that population grows:
A. Arithmetically while food grows geometrically
B. Geometrically while food grows arithmetically ✓
C. At the same rate as food supply
D. Only in industrialised nations
31. When the price of one good rises and demand for another good also rises, the two goods are:
A. Complementary
B. Substitutes ✓
C. Inferior
D. Normal
32. Per capita income is calculated as:
A. Total national income
B. National income divided by population ✓
C. Total exports minus imports
D. Government budget divided by states
33. Which of the following best describes a free trade area?
A. All goods are traded at the same price
B. Member countries trade without tariffs among themselves ✓
C. Only oil is traded freely
D. No foreign goods are allowed
34. The main aim of OPEC is to:
A. Promote democracy
B. Coordinate petroleum production and pricing among member countries ✓
C. Regulate global banking
D. Control food prices
35. An inferior good is one whose demand:
A. Rises as income rises
B. Falls as income rises ✓
C. Remains constant regardless of income
D. Is always inelastic
36. Which of the following is a cause of unemployment in Nigeria?
A. Rapid industrialisation
B. Overpopulation relative to available jobs ✓
C. Strong export earnings
D. High literacy rates
37. Comparative advantage in international trade means:
A. A country produces everything it needs
B. A country produces goods at lower opportunity cost than others ✓
C. A country that is largest always wins in trade
D. No tariffs apply between trading nations
38. Fiscal policy involves the use of:
A. Interest rates
B. Money supply
C. Government spending and taxation ✓
D. Exchange rate controls
39. Which of the following is a feature of a mixed economy?
A. All firms are government-owned
B. Private and public sectors coexist ✓
C. Market forces alone determine all prices
D. There is no government intervention
40. The term stagflation refers to:
A. Rapid economic growth with falling prices
B. High inflation combined with high unemployment ✓
C. Low prices and full employment
D. A growing economy with no inflation
41. Which of these is a reason for government intervention in the economy?
A. To eliminate all private businesses
B. To correct market failures ✓
C. To create monopolies
D. To avoid taxation
42. A regressive tax takes:
A. A higher percentage from the rich
B. The same amount from everyone
C. A higher percentage from the poor ✓
D. Only a flat rate from businesses
43. Devaluation of a currency means:
A. The currency gains more international value
B. The official value of the currency is reduced ✓
C. The currency becomes a reserve currency
D. Interest rates are reduced
44. Which of the following is an example of a merit good?
A. Luxury cars
B. Private security
C. Education and healthcare ✓
D. Jewellery
45. The concept of utility in economics refers to:
A. The usefulness of money
B. The satisfaction derived from consuming a good or service ✓
C. The cost of producing goods
D. The supply of labour
46. Economic development differs from economic growth because it:
A. Only measures GDP
B. Includes qualitative improvements in living standards ✓
C. Focuses only on industrial output
D. Measures trade volumes
47. Which of these is NOT an objective of Nigeria’s monetary policy?
A. Price stability
B. Full employment
C. Reduction of interest rates on luxury goods ✓
D. Management of exchange rates
48. An oligopoly market is one in which:
A. There is only one seller
B. There are many small sellers
C. A few large firms dominate the market ✓
D. Prices are always fixed by government
49. Privatisation in Nigeria means:
A. Government taking over private businesses
B. Selling government-owned enterprises to private investors ✓
C. Banning foreign investment
D. Creating more state corporations
50. Which of the following reduces inflation?
A. Increasing money supply
B. Reducing government borrowing and raising interest rates ✓
C. Printing more currency
D. Removing all price controls
5 Theory Questions and Answers
Question 1: Explain the law of demand with a diagram description. State THREE factors that can cause a shift in the demand curve.
Answer:
The law of demand states that, all other things being equal, as the price of a good rises, the quantity demanded falls, and as the price falls, the quantity demanded rises. This shows an inverse relationship between price and quantity demanded. On a graph, the demand curve slopes downward from left to right. A shift in the demand curve means the entire curve moves to the right or left. Factors that cause a rightward shift (increase in demand) include: a rise in consumer income, an increase in the price of a substitute good, or a change in consumer taste in favour of the good. Factors that cause a leftward shift (decrease in demand) include: a fall in consumer income, a fall in the price of a substitute good, or a change in consumer preference away from the good. Note: a change in price causes movement along the curve, not a shift of the curve.
Question 2: Distinguish between microeconomics and macroeconomics. Give TWO examples of topics studied under each.
Answer:
Microeconomics is the branch of economics that studies the economic decisions of individual units such as households, firms, and industries. It focuses on how prices are determined in specific markets and how resources are allocated at the individual level. Examples of microeconomic topics include the theory of demand and supply, and the theory of the firm including cost and revenue analysis. Macroeconomics is the branch of economics that looks at the economy as a whole. It examines national-level indicators and policies. Examples of macroeconomic topics include national income measurement and determination, and inflation and unemployment policies. The key distinction is scale: micro focuses on parts of the economy while macro focuses on the whole economy.
Question 3: What are the functions of the Central Bank of Nigeria (CBN)? State FIVE functions.
Answer:
First, the CBN is the sole issuer of currency in Nigeria. No other institution can legally print or mint Nigerian currency. Second, it acts as banker to the government. The CBN manages the government’s financial accounts and advises on fiscal matters. Third, it supervises and regulates commercial banks and other financial institutions to ensure financial stability. Fourth, it implements monetary policy by controlling money supply and interest rates to manage inflation and maintain price stability. Fifth, it manages Nigeria’s foreign exchange reserves and regulates the exchange rate of the naira against other currencies. A sixth function is serving as lender of last resort. When commercial banks face liquidity crises, the CBN can provide emergency funds to prevent financial system collapse.
Question 4: Explain THREE types of unemployment and suggest ONE solution for each type.
Answer:
Frictional unemployment occurs when workers are between jobs. It is the time taken to move from one employment to another. Solution: improved job placement services and labour market information centres help workers find new employment faster. Structural unemployment arises when there is a mismatch between the skills workers have and the skills employers need. This is often caused by changes in technology or shifts in the economy. Solution: government-funded retraining and skills development programs help workers adapt to new industries. Seasonal unemployment occurs in industries where work is only available at certain times of the year, such as agriculture during planting and harvesting seasons. Solution: diversification of economic activities in affected areas helps workers find alternative income during off-seasons.
Question 5: Explain what national income is and describe TWO methods used in measuring it.
Answer:
National income is the total monetary value of all goods and services produced by the residents of a country over a given period of time, usually one year. It is used to measure the economic performance of a country and compare living standards across countries. The first method is the output or production method. This involves adding up the value of goods and services produced by all sectors of the economy, including agriculture, manufacturing, services, and industry. Only the value added at each stage of production is counted to avoid double counting. The second method is the income method. This adds up all the incomes earned by individuals and firms in the country during the year. This includes wages and salaries, rent, interest, and profits. The third method (for additional marks) is the expenditure method, which adds up all spending on final goods and services in the economy, including household consumption, investment, government spending, and net exports.
FAQ: Economics NECO 2026/2027
Q: Is Economics hard to pass in NECO?
A: It is not hard if you study systematically. Understand the theories first, then practice questions. Avoid trying to memorise everything without understanding.
Q: What diagrams should I prepare for NECO Economics theory?
A: Prepare demand and supply diagrams, the production possibility curve, consumer equilibrium with indifference curves, and cost curves. Examiners award marks for clearly labelled diagrams.
Q: What is the biggest mistake students make in NECO Economics?
A: Confusing similar concepts like movement along a curve and a shift of the curve, or GDP and GNP. Also, many students skip calculation-based questions. Practice those because they are often straightforward.
