JAMB and WAEC Economics questions: Financial institutions

30 questions with answers and explanations. Tap an option to check yourself.

1. Question 21· Financial institutions· WAEC

   Commercial banks create credit because

   • Athey sell shares
   • Bthey print money
   • Cgovernment gives them money
   • Donly a fraction of deposits is kept as reserves

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   Explanation and discussion

2. Question 22· Financial institutions· JAMB

   A commercial bank receives a deposit of ₦10,000 and the cash reserve ratio is 10%. The maximum total deposits that can be created in the banking system is

   • A₦1,000
   • B₦90,000
   • C₦10,000
   • D₦100,000

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   Explanation and discussion

3. Question 23· Financial institutions· JAMB

   The Nigeria Deposit Insurance Corporation (NDIC) protects

   • Abank depositors
   • Bshareholders
   • Cborrowers
   • Dimporters

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   Explanation and discussion

4. Question 24· Financial institutions· JAMB

   Development banks provide mainly

   • Along-term loans for agriculture and industry
   • Boverdrafts to individuals
   • Cforeign exchange
   • Dinsurance

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   Explanation and discussion

5. Question 25· Financial institutions· JAMB

   Treasury bills are

   • Ainsurance policies
   • Blong-term company shares
   • Cbank notes
   • Dshort-term government securities

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   Explanation and discussion

6. Question 26· Financial institutions· JAMB

   Raising the cash reserve ratio is used by the Central Bank to

   • Aprint more money
   • Bincrease the money supply
   • Clower interest rates
   • Dreduce banks' ability to lend

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   Explanation and discussion

7. Question 27· Financial institutions· JAMB

   The Nigerian Exchange (stock exchange) is a market where

   • Agoods are imported
   • Bforeign currencies are printed
   • Cshares and other securities are bought and sold
   • Dtaxes are paid

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   Explanation and discussion

8. Question 28· Financial institutions· JAMB

   A function of the Central Bank of Nigeria is to

   • Arun supermarkets
   • Bgrant loans to individuals
   • Ccollect personal income tax
   • Dissue the national currency

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   Explanation and discussion

9. Question 29· Financial institutions· WAEC

   Commercial banks create credit mainly by

   • Alending out part of their deposits
   • Bprinting currency
   • Cbuying shares
   • Dcollecting taxes

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   Explanation and discussion

10. Question 30· Financial institutions· WAEC

    When the Central Bank raises its policy interest rate, it is mainly trying to

    • Aencourage more borrowing
    • Bincrease the supply of money
    • Creduce inflation by making borrowing dearer
    • Dprint more naira

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    Explanation and discussion