WAEC 2025 Economics Paper 1 (Objective)

Time Allowed: 1 hour
Instructions:
Answer all questions. Each question is followed by four options lettered A to D. Choose the correct option for each question.

Section A: Microeconomics

1. What is the basic economic problem?
   A. Scarcity of resources
   B. Overpopulation
   C. Unemployment
   D. Inflation

   Answer: A. Scarcity of resources

2. Which of the following is a factor of production?
   A. Money
   B. Land
   C. Interest
   D. Profit

   Answer: B. Land

3. The law of demand states that:
   A. As price increases, demand decreases
   B. As price decreases, demand decreases
   C. As price increases, supply decreases
   D. As price decreases, supply increases

   Answer: A. As price increases, demand decreases

4. What is the equilibrium price in a market?
   A. The price at which demand exceeds supply
   B. The price at which supply exceeds demand
   C. The price at which demand equals supply
   D. The price set by the government

   Answer: C. The price at which demand equals supply

5. Which of the following is an example of a public good?
   A. Bread
   B. National defense
   C. Clothing
   D. Cars

   Answer: B. National defense

Section B: Macroeconomics

6. What is Gross Domestic Product (GDP)?
   A. The total value of goods and services produced in a country in a year
   B. The total value of a country’s imports and exports
   C. The total savings in a country
   D. The total population of a country

   Answer: A. The total value of goods and services produced in a country in a year

7. Which of the following is a tool of monetary policy?
   A. Taxation
   B. Government spending
   C. Interest rates
   D. Subsidies

   Answer: C. Interest rates

8. Inflation is best defined as:
   A. A decrease in the general price level
   B. An increase in the general price level
   C. A decrease in the money supply
   D. An increase in unemployment

   Answer: B. An increase in the general price level

9. What is the primary objective of fiscal policy?
   A. To control inflation
   B. To regulate the money supply
   C. To manage government revenue and expenditure
   D. To stabilize the exchange rate

   Answer: C. To manage government revenue and expenditure

10. Which of the following is a characteristic of a developing economy?
    A. High per capita income
    B. Low population growth rate
    C. High dependence on agriculture
    D. Advanced technology

    Answer: C. High dependence on agriculture

Section C: International Trade

11. What is the balance of trade?
    A. The difference between a country’s exports and imports of goods
    B. The difference between a country’s savings and investments
    C. The total value of a country’s exports
    D. The total value of a country’s imports

    Answer: A. The difference between a country’s exports and imports of goods

12. Which of the following is a benefit of international trade?
    A. Increased competition
    B. Higher prices for domestic goods
    C. Reduced variety of goods
    D. Decreased economic growth

    Answer: A. Increased competition

13. What is a tariff?
    A. A tax on imports
    B. A subsidy for exports
    C. A limit on the quantity of imports
    D. A ban on trade

    Answer: A. A tax on imports

14. Which organization promotes free trade among its member countries?
    A. World Bank
    B. International Monetary Fund (IMF)
    C. World Trade Organization (WTO)
    D. United Nations (UN)

    Answer: C. World Trade Organization (WTO)

15. What is the main purpose of foreign exchange?
    A. To regulate inflation
    B. To facilitate international trade
    C. To control population growth
    D. To increase government revenue

    Answer: B. To facilitate international trade

WAEC 2025 Economics Paper 2 (Essay)

Time Allowed: 2 hours
Instructions:
Answer four questions in all: one from Section A, two from Section B, and one from Section C.

Section A: Microeconomics

1. (a) Define the term “opportunity cost.”
   (b) Explain how opportunity cost affects decision-making in an economy.

   Sample Answer:
   (a) Opportunity cost is the value of the next best alternative forgone when making a choice.

   (b) Opportunity cost affects decision-making by forcing individuals, firms, and governments to prioritize their needs and allocate resources efficiently. For example, if a government decides to allocate funds to build a hospital, the opportunity cost is the other projects (e.g., schools or roads) that could have been funded instead. Understanding opportunity cost helps in making informed decisions that maximize benefits.

Section B: Macroeconomics

2. (a) What is inflation?
   (b) Discuss three causes of inflation.

   Sample Answer:
   (a) Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

   (b) Three causes of inflation are:
   (i) Demand-pull inflation: This occurs when aggregate demand exceeds aggregate supply, leading to higher prices.
   (ii) Cost-push inflation: This occurs when the cost of production increases, causing producers to raise prices.
   (iii) Monetary inflation: This occurs when there is an excessive increase in the money supply, leading to more money chasing fewer goods.

3. (a) Define unemployment.
   (b) Explain three types of unemployment.

   Sample Answer:
   (a) Unemployment refers to a situation where individuals who are willing and able to work cannot find jobs.

   (b) Three types of unemployment are:
   (i) Frictional unemployment: This occurs when workers are temporarily between jobs or searching for new ones.
   (ii) Structural unemployment: This occurs due to a mismatch between the skills of workers and the requirements of available jobs.
   (iii) Cyclical unemployment: This occurs due to a downturn in the business cycle, leading to reduced demand for labor.

Section C: International Trade

4. (a) What is international trade?
   (b) Discuss three advantages of international trade.

   Sample Answer:
   (a) International trade refers to the exchange of goods and services between countries.

   (b) Three advantages of international trade are:
   (i) Economic growth: International trade allows countries to specialize in the production of goods and services in which they have a comparative advantage, leading to increased output and income.
   (ii) Access to a wider market: Producers can sell their goods to a larger market, increasing sales and profits.
   (iii) Consumer benefits: Consumers have access to a wider variety of goods and services at competitive prices.

5. (a) Define balance of payments.
   (b) Explain two components of the balance of payments.

   Sample Answer:
   (a) Balance of payments is a record of all economic transactions between a country and the rest of the world over a specific period.

   (b) Two components of the balance of payments are:
   (i) Current account: This records the trade in goods and services, income, and current transfers.
   (ii) Capital account: This records the flow of capital, such as investments and loans, between a country and the rest of the world.

Section D: Development Economics

6. (a) What is economic development?
   (b) Discuss three challenges faced by developing economies.

   Sample Answer:
   (a) Economic development refers to the improvement in the standard of living, economic health, and overall well-being of a population.

   (b) Three challenges faced by developing economies are:
   (i) Poverty: A large proportion of the population lives below the poverty line, limiting their access to basic needs.
   (ii) Unemployment: High unemployment rates lead to low income and reduced economic growth.
   (iii) Poor infrastructure: Inadequate transportation, communication, and energy infrastructure hinder economic activities.

Section E: Economic Policies

7. (a) What is fiscal policy?
   (b) Explain two tools of fiscal policy.

   Sample Answer:
   (a) Fiscal policy refers to the use of government revenue (taxation) and expenditure to influence the economy.

   (b) Two tools of fiscal policy are:
   (i) Taxation: The government can increase or decrease taxes to influence disposable income and consumption.
   (ii) Government spending: The government can increase spending on public projects to stimulate economic growth or reduce spending to control inflation.

This concludes the simulated WAEC 2025 Economics paper. Let me know if you need further assistance!