WASSCE Economics · Paper 1 style

National income

One sample question with the full working. 26 more in the app, with instant feedback and repair sessions for the traps below.

If the marginal propensity to consume is 0.8, what is the value of the investment multiplier?

A1.25
B5
C0.2
D0.8

Show the answer and working

Answer: B

k = 1/(1 − MPC) = 1/(1 − 0.8) = 1/0.2 = 5.

Trap A Turns the formula upside down: Learn the formula with its meaning: elasticity = responsiveness of QUANTITY, so %ΔQ is on top; k = 1/MPS = 1/(1 − MPC).

Trap C Stops at a different economic quantity: Underline what the question asks for and check the final number is THAT quantity, not a step on the way.

Trap D Gives a number from the question as the answer: If your answer appears in the question, check again: the question almost never asks you to copy a figure. Work out the required quantity from its definition.

Traps in National income

Turns the formula upside down
Learn the formula with its meaning: elasticity = responsiveness of QUANTITY, so %ΔQ is on top; k = 1/MPS = 1/(1 − MPC).
Stops at a different economic quantity
Underline what the question asks for and check the final number is THAT quantity, not a step on the way.
Gives a number from the question as the answer
If your answer appears in the question, check again: the question almost never asks you to copy a figure. Work out the required quantity from its definition.
Uses the wrong arithmetic operation
Write the definition in words first (TR = price × quantity; ATC = TC ÷ Q) and only then put in numbers. Check units: totals and averages cannot be added.
Reverses the direction of the effect
Trace the chain step by step (e.g. buying securities → banks gain cash → money supply rises) and check the sign at every link.
Gives only part of the answer
List every component in the definition (GDP = C + I + G + (X − M)) and tick them off before answering.
Picks a closely related concept
Learn related terms as contrasting pairs with one-line definitions, and identify which one the stem describes.
Chooses a true but irrelevant statement
Re-read the question's key term and test each option against it, not against whether it is true in general.
Confuses GDP, GNP and NNP
GNP = GDP + net factor income from abroad. NNP = GNP − depreciation. Per capita = total ÷ population.
Over-generalises a rule
Economic laws hold 'other things being equal' and within limits. Be suspicious of options with always/never/all.
Applies the rule for the opposite case
Before answering, name the case in the stem (inelastic? price floor ABOVE equilibrium? point INSIDE the PPC?) and recall the rule for that case only.
Confuses tax systems
Look at the AVERAGE rate: rises with income = progressive; falls = regressive; constant = proportional.
Mismatches factors of production and rewards
Land → rent; labour → wages; capital → interest; entrepreneur → profit.

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