JAMB and WAEC Economics questions: Financial institutions

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

1. Question 1· Financial institutions· JAMB

   When the Central Bank raises the monetary policy rate, it usually

   • Aincreases money supply
   • Bmakes borrowing cheaper
   • Cmakes borrowing dearer and reduces money supply
   • Dhas no effect on banks

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   Explanation and discussion

2. Question 2· Financial institutions· WAEC

   A commercial bank creates credit mainly through

   • Aprinting currency
   • Bcollecting taxes
   • Cselling shares
   • Dgranting loans and overdrafts

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3. Question 3· Financial institutions· JAMB

   The capital market differs from the money market because the capital market deals in

   • Acoins and notes
   • Bshort-term funds only
   • Cforeign currency only
   • Dlong-term funds

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4. Question 4· Financial institutions· WAEC

   The market for long-term loanable funds is the

   • Acapital market
   • Bmoney market
   • Ccommodity market
   • Dforeign exchange market

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5. Question 5· Financial institutions· WAEC

   The Central Bank of Nigeria controls the money supply by

   • Aaccepting deposits from the public
   • Bopen market operations
   • Cgranting overdrafts to individuals
   • Dselling insurance

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6. Question 6· Financial institutions· WAEC

   The Nigerian Exchange (NGX) deals mainly in

   • Alending to farmers
   • Bprinting currency
   • Cissuing insurance
   • Dbuying and selling shares and bonds

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7. Question 7· Financial institutions· JAMB

   A main function of commercial banks is to

   • Aaccept deposits and grant loans
   • Bissue currency
   • Cfix exchange rates
   • Dcollect taxes

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8. Question 8· Financial institutions· WAEC

   The Central Bank of Nigeria is the

   • Abank that lends to traders
   • Bagent of foreign banks
   • Cowner of all commercial banks
   • Dbanker to the government

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9. Question 9· Financial institutions· WAEC

   If the cash reserve ratio is 10% and a bank receives a deposit of ₦100,000, the maximum total deposits that can be created is

   • A₦100,000
   • B₦1,000,000
   • C₦10,000
   • D₦900,000

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10. Question 10· Financial institutions· WAEC

    The Nigerian Exchange (stock exchange) is a market for

    • Ashort-term bills only
    • Bforeign currency only
    • Cagricultural produce
    • Dlong-term securities such as shares

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11. Question 11· Financial institutions· WAEC

    A commercial bank accepts deposits and

    • Acontrols monetary policy
    • Bissues currency
    • Cgrants loans to customers
    • Dfixes exchange rates

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12. Question 12· Financial institutions· JAMB

    Mortgage institutions provide loans mainly for

    • Abuying shares
    • Bimporting goods
    • Cpaying salaries
    • Dbuying or building houses

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13. Question 13· Financial institutions· WAEC

    To reduce inflation, the Central Bank is likely to

    • Areduce reserve requirements
    • Blower interest rates
    • Cbuy government securities
    • Draise the monetary policy rate

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14. Question 14· Financial institutions· JAMB

    The money market deals in

    • Aforeign land
    • Blong-term shares only
    • Cshort-term funds
    • Dgoods

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15. Question 15· Financial institutions· JAMB

    To reduce the money supply, the Central Bank may

    • Aprint more money
    • Blower the monetary policy rate
    • Creduce the cash reserve ratio
    • Dsell government securities in the open market

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16. Question 16· Financial institutions· JAMB

    Insurance companies are part of the financial system because they

    • Amobilise savings through premiums and invest them
    • Bprint money
    • Cfix exchange rates
    • Dcollect taxes

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17. Question 17· Financial institutions· WAEC

    A development bank provides

    • Aforeign exchange only
    • Bonly current accounts
    • Cinsurance
    • Dlong-term loans for development projects

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18. Question 18· Financial institutions· JAMB

    The capital market deals in

    • Aconsumer goods
    • Bshort-term loans only
    • Cforeign exchange only
    • Dlong-term funds

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19. Question 19· Financial institutions· WAEC

    Which institution is the lender of last resort?

    • Athe stock exchange
    • Ba commercial bank
    • Ca mortgage bank
    • Dthe Central Bank

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20. Question 20· Financial institutions· JAMB

    If the cash reserve ratio is 20%, a new deposit of ₦10,000 can create total deposits of up to

    • A₦12,000
    • B₦8,000
    • C₦50,000
    • D₦200,000

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