WAEC Economics 2021 past questions

Checked by the Skolra question team · Last updated 15 October 2026

Ten questions from the 2021 WAEC Economics paper, with answers and explanations. We hold 38 questions from this paper, and the Skolra app has all of them.

WAEC Economics 2021 questions and answers

1. 1.

   Separation of ownership of resources and their control is mostly found in a __________

   1. A
      sole proprietorship
   2. B
      public limited company (PLC)
      Correct
   3. C
      workers' cooperative society
   4. D
      general partnership
   Show answerHide answer

   Answer: B

   In a public limited company (PLC), ownership and control are separated:

   • Owners (shareholders) provide capital by buying shares and receive dividends, but they do not manage the day-to-day operations.
   • Controllers (directors and professional managers) run the business but may own few or no shares.
2. 2.

   When a government cuts down her expenditure to reduce inflation, she has embarked on___________

   1. A
      quantitative easing
   2. B
      deflationary (contractionary) fiscal policy
      Correct
   3. C
      expansionary monetary policy
   4. D
      supply-side economic policy
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   Answer: B

   Fiscal policy refers to the government's use of taxation and public expenditure to influence the economy.

   When the government cuts expenditure (and/or raises taxes) to reduce aggregate demand and bring down inflation, this is called deflationary or contractionary fiscal policy.

3. 3.

   In order to enable the government of a country to increase its tax revenue, it will be advisable for it to increase taxes on_______

   1. A
      goods with perfectly elastic demand, since consumers cannot avoid buying them
   2. B
      goods with inelastic demand, because quantity demanded falls very little when price rises
      Correct
   3. C
      goods with unitary price elasticity, where revenue remains exactly constant after a tax
   4. D
      luxury goods with highly elastic demand, to maximise the volume of transactions
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   Answer: B

   When the government raises a tax on a good, it raises the price consumers pay. The effect on total tax revenue depends on the price elasticity of demand (PED):

   • If demand is inelastic (PED < 1), consumers are relatively unresponsive to the price rise. Quantity sold falls by a smaller percentage than the price rises, so total tax revenue increases.
   • If demand is elastic (PED > 1), quantity demanded falls sharply after the price rise, reducing the tax base and potentially lowering total revenue.
4. 4.

   The standard of living in two countries can be compared using the___________

   1. A
      Balance of payments data
   2. B
      Per capita income
      Correct
   3. C
      Gross Domestic Product (GDP)
   4. D
      Total national savings
   Show answerHide answer

   Answer: B

   The standard of living in two countries is best compared using per capita income (GDP or GNP per head), which adjusts total national income for population size. A large country may have a high GDP but a low standard of living if most people share little of that income.

5. 5.

   Abundant natural resources do not contribute to economic growth in developing countries because of_________

   1. A
      overabundance of capital, which makes resource extraction unnecessary
   2. B
      lack of the skilled manpower and technology needed to exploit them efficiently
      Correct
   3. C
      excessive foreign direct investment that crowds out local entrepreneurs
   4. D
      strong democratic institutions that prevent resource extraction
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   Answer: B

   Developing countries often sit on vast mineral, energy, and agricultural resources yet remain poor — a phenomenon sometimes called the resource curse or paradox of plenty.

6. 6.

   If a country imposes a barrier on trade, the resultant effect will be _________

   1. A
      higher prices for domestic consumers of the goods that face the trade restriction
      Correct
   2. B
      a fall in the domestic price of the protected goods due to increased competition
   3. C
      a reduction in government tax revenue from international trade
   4. D
      an increase in the volume of foreign direct investment into the protected sector
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   Answer: A

   A trade barrier — such as a tariff (import duty), quota, or embargo — restricts the supply of imported goods in the domestic market.

   The main effect is that domestic consumers pay higher prices because:

   • A tariff adds directly to the cost of imported goods, which sellers pass on to buyers.
   • A quota reduces import supply, and with unchanged demand, prices rise.
7. 7.

   People who dispose of their assets are expected to pay ______________

   1. A
      value added tax, levied on the sale price of goods and services
   2. B
      income tax, charged on wages and salaries earned during the financial year
   3. C
      capital gains tax, levied on the profit made from selling or disposing of an asset
      Correct
   4. D
      excise duty, imposed on the manufacture or consumption of specific goods
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   Answer: C

   Capital gains tax (CGT) is charged on the profit (the gain) realised when a person sells or otherwise disposes of an asset — such as land, shares, property, or a business — for more than its original purchase price.

   For example, if someone bought land for ₦5 million and sells it for ₦8 million, the ₦3 million gain is subject to capital gains tax.

   The tax applies at the point of disposal, which distinguishes it from:

   • Income tax — charged on earnings from employment or business activities.
   • Value added tax — charged on the consumption of goods and services.
   • Excise duty — charged on the production of specific goods such as tobacco and alcohol.
8. 8.

   Functions of money does not include_______

   1. A
      acting as a medium of exchange in buying and selling transactions
   2. B
      functioning as a standard for deferred (future) payments
   3. C
      serving as a store of value for future use
   4. D
      direct production of goods and services in the economy
      Correct
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   Answer: D

   The four accepted functions of money are:

   1. Medium of exchange — money facilitates transactions by replacing barter.
   2. Unit of account — money provides a common measure for expressing the value of goods and services.
   3. Store of value — money retains purchasing power over time, allowing people to save.
   4. Standard of deferred payment — money enables credit transactions by providing an agreed measure for future payments.
9. 9.

   Balance of payments and trade problems that arose after the world wars were resolved by the____________

   1. A
      League of Nations Monetary Committee, which set global currency parities
   2. B
      United Nations Security Council, which mediated bilateral trade disputes
   3. C
      World Trade Organization, which enforced multilateral trade agreements
   4. D
      Bretton Woods Conference, which established the IMF and the World Bank
      Correct
   Show answerHide answer

   Answer: D

   After the devastation of the Second World War, major economies faced severe balance-of-payments imbalances, currency instability, and collapsed international trade.

   In 1944, delegates from 44 Allied nations met in Bretton Woods, New Hampshire, and established:

   • The International Monetary Fund (IMF) — to provide short-term balance-of-payments support and maintain exchange-rate stability.
   • The International Bank for Reconstruction and Development (World Bank) — to finance post-war reconstruction and later development projects.
10. 10.

    A customs union is an economic grouping which has___________

    1. A
       free movement of labour and capital only, without a common trade policy
    2. B
       a single currency for all member states and a unified central bank
    3. C
       a common fiscal policy and shared government budget across all member countries
    4. D
       free trade among member states and a common external tariff on imports from non-members
       Correct
    Show answerHide answer

    Answer: D

    Economic integration takes several forms, each with a deeper level of cooperation than the previous:

    1. Free Trade Area — members abolish tariffs among themselves but each sets its own tariffs on imports from outside.
    2. Customs Union — members enjoy free trade among themselves and adopt a common external tariff (CET) on imports from non-member countries. This is the defining feature.
    3. Common Market — adds free movement of labour and capital.
    4. Economic Union — adds a common currency and coordinated fiscal/monetary policy.

The questions come from past JAMB, WAEC and NECO papers. We use software to help write the answer options and explanations, and every answer is checked twice before it goes on the site. How we check

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Practise all 38 questions we hold from the 2021 paper, on a timed CBT screen

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