2026 NECO Objective & Essay Economics examination Questions and Answers
2026 NECO Objective & Essay Economics examination Questions and Answers
Paper I
Objective Test (Questions 1–60)
Instructions: Choose the option that best answers each question.
1. Economics is best defined as the study of
A. money and banking only
B. production of goods only
C. how scarce resources are allocated to satisfy unlimited human wants
D. buying and selling
Answer: C
2. Which of the following is an example of a capital good?
A. Bread
B. Television
C. Tractor
D. Rice
Answer: C
3. The basic economic problem is
A. inflation
B. unemployment
C. scarcity
D. poverty
Answer: C
4. Opportunity cost refers to
A. transport cost
B. accounting cost
C. the next best alternative forgone
D. production cost
Answer: C
5. Which of the following is a free good?
A. Petrol
B. Air
C. Cement
D. Rice
Answer: B
6. Which factor of production receives wages?
A. Land
B. Labour
C. Capital
D. Enterprise
Answer: B
7. Rent is the reward for
A. labour
B. land
C. entrepreneur
D. capital
Answer: B
8. Which of the following is fixed in supply?
A. Labour
B. Land
C. Capital
D. Enterprise
Answer: B
9. A demand schedule shows
A. prices only
B. quantity demanded at different prices
C. quantity supplied
D. market equilibrium
Answer: B
10. When price falls, quantity demanded generally
A. decreases
B. remains constant
C. increases
D. disappears
Answer: C
11. Which factor causes a shift in the demand curve?
A. Change in price
B. Change in consumers’ income
C. Increase in production cost
D. Tax on producers
Answer: B
2026 NECO Objective & Essay Economics examination Questions and Answers
12. Supply refers to
A. all goods in the market
B. quantity producers are willing and able to offer for sale at various prices
C. quantity consumers buy
D. quantity imported
Answer: B
13. A rise in production cost will
A. increase supply
B. reduce supply
C. increase demand
D. reduce demand
Answer: B
14. Market equilibrium occurs when
A. demand exceeds supply
B. supply exceeds demand
C. demand equals supply
D. prices are highest
Answer: C
15. Excess demand causes
A. surplus
B. shortage
C. equilibrium
D. recession
Answer: B
16. Which market structure has many buyers and sellers?
A. Monopoly
B. Perfect competition
C. Duopoly
D. Oligopoly
Answer: B
17. A monopolist is a
A. price taker
B. price maker
C. wholesaler
D. retailer
Answer: B
18. Which market has only one seller?
A. Oligopoly
B. Monopoly
C. Perfect competition
D. Monopolistic competition
Answer: B
19. Average cost is obtained by dividing
A. total revenue by output
B. total cost by output
C. fixed cost by output
D. variable cost by output
Answer: B
20. Marginal cost is
A. additional cost of producing one extra unit
B. fixed cost
C. average revenue
D. total revenue
Answer: A
21. Total revenue equals
A. Price × Quantity Sold
B. Cost × Output
C. Profit × Sales
D. Revenue − Cost
Answer: A
22. Profit is
B. Total Cost − Revenue
C. Average Cost − Revenue
D. Revenue × Cost
Answer: A
23. Which of the following is a fixed cost?
A. Fuel
B. Wages paid per unit
C. Rent of factory building
D. Raw materials
Answer: C
2026 NECO Objective & Essay Economics examination Questions and Answers
24. Which institution issues currency in Nigeria?
A. Ministry of Finance
B. Nigerian Stock Exchange
C. Central Bank of Nigeria
D. Commercial Banks
Answer: C
25. One major function of commercial banks is
A. printing money
B. accepting deposits
C. making laws
D. collecting taxes
Answer: B
26. Inflation refers to
A. decrease in prices
B. persistent rise in general price level
C. increase in imports
D. increase in unemployment
Answer: B
27. Which policy is commonly used to control inflation?
A. Expansionary monetary policy
B. Contractionary monetary policy
C. Free trade
D. Population growth
Answer: B
28. Money performs which of the following functions?
A. Medium of exchange
B. Means of transportation
C. Unit of production
D. Distribution channel
Answer: A
29. Which of the following is NOT a characteristic of good money?
A. Durability
B. Portability
C. Perishability
D. Divisibility
Answer: C
30. National income refers to
A. government revenue only
B. income earned by exporters
C. total value of final goods and services produced within an economy during a given period
D. tax collected in a country
Answer: C
31. Gross Domestic Product (GDP) measures the
A. total population of a country
B. total value of final goods and services produced within a country in a given period
C. total exports of a country
D. value of imported goods
Answer: B
32. Which of the following is an indirect tax?
A. Personal Income Tax
B. Company Income Tax
C. Value Added Tax (VAT)
D. Capital Gains Tax
Answer: C
33. Government expenditure on roads and bridges is classified as
A. recurrent expenditure
B. capital expenditure
C. transfer payment
D. debt servicing
Answer: B
34. A budget in which government expenditure exceeds revenue is known as
A. balanced budget
B. surplus budget
C. deficit budget
D. cash budget
Answer: C
35. One major objective of taxation is to
A. encourage inflation
B. raise revenue for government
C. reduce production permanently
D. increase imports
Answer: B
36. Which institution is responsible for collecting customs duties in Nigeria?
A. Nigeria Police Force
B. Federal Inland Revenue Service
C. Nigeria Customs Service
D. Central Bank of Nigeria
Answer: C
37. International trade is the exchange of
A. goods within a state
B. goods between local governments
C. goods and services between countries
D. only agricultural products
Answer: C
38. One major reason countries engage in international trade is
A. self-sufficiency
B. comparative advantage
C. population decline
D. poor leadership
Answer: B
39. A favourable balance of trade occurs when
A. imports exceed exports
B. exports equal imports
C. exports exceed imports
D. imports are prohibited
Answer: C
40. Which of the following promotes international trade?
A. High tariffs
B. Import quotas
C. Improved transportation
D. Trade embargo
Answer: C
41. Currency depreciation generally makes exports
A. more expensive
B. cheaper to foreign buyers
C. unavailable
D. illegal
Answer: B
2026 NECO Objective & Essay Economics examination Questions and Answers
42. ECOWAS was established mainly to
A. promote military rule
B. encourage regional economic cooperation
C. increase border restrictions
D. control elections
Answer: B
43. Which of the following is a member of ECOWAS?
A. Kenya
B. Ghana
C. South Africa
D. Egypt
Answer: B
44. Which sector of the Nigerian economy is primarily responsible for crude oil production?
A. Manufacturing
B. Mining and Quarrying
C. Construction
D. Commerce
Answer: B
45. Which of the following is a major export product of Nigeria?
A. Cocoa only
B. Palm Oil only
C. Crude Oil
D. Cotton
Answer: C
46. Population census is important because it helps government to
A. increase inflation
B. plan for development
C. reduce exports
D. determine exchange rates
Answer: B
47. Which of the following is a cause of rapid population growth?
A. High death rate
B. Low birth rate
C. Improved healthcare
D. Emigration
Answer: C
48. One advantage of mechanized agriculture is
A. lower productivity
B. increased output
C. increased manual labour
D. poor harvest
Answer: B
49. Which of the following is a cash crop?
A. Yam
B. Cassava
C. Cocoa
D. Maize
Answer: C
50. Industrialization contributes to economic development mainly by
A. increasing unemployment
B. reducing production
C. creating employment opportunities
D. discouraging investment
Answer: C
51. Which of the following is a characteristic of a developing economy?
A. High level of industrialization
B. High dependence on agriculture
C. Very low unemployment
D. High per capita income
Answer: B
52. Inflation reduces the
A. purchasing power of money
B. quantity of money
C. population of a country
D. exchange rate permanently
Answer: A
53. Which monetary policy tool is used by the Central Bank to regulate money supply?
A. Import licence
B. Open Market Operations
C. Export promotion
D. Population census
Answer: B
54. Which of the following is NOT a function of money?
A. Medium of exchange
B. Store of value
C. Unit of account
D. Source of production
Answer: D
55. Development planning is aimed at
B. achieving sustainable economic growth
C. increasing poverty
D. discouraging investment
Answer: B
56. Human capital development mainly involves investment in
A. buildings only
B. education and health
C. roads only
D. minerals
Answer: B
57. Which of the following is an example of a public corporation in Nigeria?
A. A private commercial bank
B. Government-owned broadcasting corporation
C. Sole proprietorship
D. Partnership business
Answer: B
58. Privatization means
A. government takes over private firms
B. transfer of government-owned enterprises to private ownership
C. banning foreign investors
D. increasing taxes
Answer: B
59. Sustainable development refers to development that
A. ignores future generations
B. meets present needs without compromising the ability of future generations to meet their own needs
C. depends only on crude oil
D. discourages environmental protection
Answer: B
60. Which of the following is the best indicator of economic development?
A. Population size only
B. Improvement in living standards
C. Number of political parties
D. Increase in imports
Answer: B
2026 NECO Objective & Essay Economics examination Questions and Answers
Paper II Essay
Time: 2 Hours
Instructions:
- Answer Question 1 (Compulsory) and any four other questions.
- All questions carry equal marks.
- Support your answers with relevant economic concepts and examples where necessary.
Question 1 (Compulsory)
(a) Define Economics.
Answer
Economics is the social science that studies how individuals, firms, and governments allocate scarce resources among competing unlimited wants to achieve maximum satisfaction.
(2 Marks)
(b) Explain five basic economic problems.
Answer
i. Scarcity
Resources available to produce goods and services are limited, while human wants are unlimited.
ii. Choice
Individuals, firms, and governments must choose among competing alternatives.
iii. Opportunity Cost
The value of the next best alternative forgone when a choice is made.
iv. Scale of Preference
People rank their wants according to importance because they cannot satisfy all wants at once.
v. Resource Allocation
Available resources must be distributed efficiently among different productive activities.
(10 Marks)
(c) Explain four factors affecting demand for a commodity.
Answer
- Consumer income.
- Price of related goods.
- Population size.
- Consumer taste and fashion.
(8 Marks)
Total: 20 Mark
Question 2
Explain the law of demand and state five exceptions to the law.
Model Answer
Law of Demand
The law states that, other things being equal, the quantity demanded of a commodity increases when its price falls and decreases when its price rises.
Exceptions
- Giffen goods.
- Prestige (Veblen) goods.
- Speculative buying.
- Necessities with few substitutes.
- Goods purchased during emergencies.
Marking Guide
Definition (5)
Five exceptions (15)
Total: 20 Marks
Question 3
Discuss five functions of money.
Model Answer
Money performs the following functions:
- Medium of exchange.
- Measure of value.
- Store of value.
- Standard for deferred payments.
- Transfer of purchasing power.
Marking Guide
Definition (5)
Five functions (15)
Total: 20 Marks
Question 4
Explain five functions of the Central Bank of Nigeria.
Model Answer
- Banker to government.
- Banker’s bank.
- Issuer of legal tender.
- Controller of credit.
- Custodian of foreign reserves.
Marking Guide
Explanation of each function (4 Marks × 5)
Total: 20 Marks
2026 NECO Objective & Essay Economics examination Questions and Answers
Question 5
Explain five causes of inflation.
Model Answer
- Excess money supply.
- High cost of production.
- Demand-pull inflation.
- Importation of inflation.
- Government deficit financing.
Marking Guide
Five well-explained causes
(4 Marks each)
Total: 20 Marks
Question 6
State five advantages and five disadvantages of international trade.
Model Answer
Advantages
- Larger market.
- Foreign exchange earnings.
- Specialization.
- Employment generation.
- Technology transfer.
Disadvantages
- Dumping.
- Dependence on imports.
- Unemployment in local industries.
- Balance of payments problems.
- Exploitation by developed countries.
Marking Guide
Advantages (10)
Disadvantages (10)
Total: 20 Marks
Question 7
Explain five sources of government revenue.
Model Answer
- Taxation.
- Customs and Excise Duties.
- Petroleum revenue.
- Government investments.
- Borrowing.
Marking Guide
Five explained points
(4 Marks each)
Total: 20 Marks
Question 8
Explain five problems facing agriculture in Nigeria and suggest solutions.
Model Answer
Problems
- Poor financing.
- Primitive farming methods.
- Poor transportation.
- Climate change.
- Inadequate storage facilities.
Solutions
- Agricultural credit.
- Mechanization.
- Better road network.
- Irrigation.
- Improved storage systems.
Marking Guide
Problems (10)
Solutions (10)
Total: 20 Marks
Question 9
Explain five characteristics of perfect competition.
Model Answer
- Many buyers and sellers.
- Homogeneous products.
- Free entry and exit.
- Perfect knowledge.
- Price takers.
Marking Guide
Five characteristics
(4 Marks each)
Total: 20 Marks
Question 10
Explain five measures government can adopt to reduce unemployment.
Model Answer
- Promote industrialization.
- Improve vocational education.
- Encourage entrepreneurship.
- Support agriculture.
- Increase public investment in infrastructure.
Marking Guide
Five explained measures
(4 Marks each)
Total: 20 Marks
Suggested Marking Scheme
| Question | Marks |
|---|---|
| Question 1 | 20 |
| Question 2 | 20 |
| Question 3 | 20 |
| Question 4 | 20 |
| Question 5 | 20 |
| Question 6 | 20 |
| Question 7 | 20 |
| Question 8 | 20 |
| Question 9 | 20 |
| Question 10 | 20 |
Total Marks: 100
This completes a full original NECO-style Economics revision examination comprising 60 objective questions with answers and 10 essay questions with model answers and marking guides, aligned with the current NECO Economics syllabus.
