JAMB Economics Past Questions & Answers - Page 87

By implication, the dependence on oil revenue to finance national development has made the Nigerian economy highly susceptible to oil price volatility. This has in turn slowed the growth of other industries like agriculture because less attention and investment is being put in there.

The multiplier effect refers to the increase in final income arising from any new injection of spending. The size of the multiplier depends upon household's marginal decisions to spend, called the marginal propensity to consume (mpc), or to save, called the marginal propensity to save (mps).

The following general formula to calculate the multiplier uses marginal propensities, as follows:

    1      
1 - mpc

Hence, if consumers save 0.8 and spend 0.2 of every N1 of extra income, the multiplier will be:
   1      =        1      = 5
1 - 0.8         0.2

Socialism is an economic and political system based on public or collective ownership of the means of production. it is an economic and political theory  advocating collective or governmental ownership and administration of the means of production.

• Tastes and Preferences of the Consumers
• Income of the People
• Changes in Prices of the Related Goods
• Advertisement Expenditure
• The Number of Consumers in the Market
• Consumer's expectations with Regard to Future Prices

No explanation has been provided for this answer.