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Grade 12 Economics entrance exam, 2018 E.C. (2026)

Real questions from the Grade 12 university entrance exam in Economics, as students sat it in 2018 E.C. Every question comes with the correct answer and a worked explanation.

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  • Social science stream

    Who sits it

  • 2018 E.C. (2026)

    Exam year

  • 77 questions with answers

    In this set

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Answer each question yourself before opening the answer. The explanations point to the exact place in the textbook, so you know which page to reread when you miss one.

Question 1

Economic inequality is the disproportionate distribution of total national income among households. Which one of the following is correct about the alternative measurements of income inequality?

  1. A.Kuznets ratio is a measure of the degree of inequality between high income and low-income groups in the country.
  2. B.The Gini-coefficient value equals to zero implies perfect inequality.
  3. C.The higher is the value of Gini coefficient, the lower the inequality.
  4. D.In the Lorenz curve if income distribution were perfectly unequal, it would be represented by the 45-degree line.
Show the answer and explanation

Answer: A Kuznets ratio is a measure of the degree of inequality between high income and low-income groups in the country.

Why

The Kuznets ratio measures the ratio of income going to the highest earners (e.g., top 20%) to that of the lowest earners (e.g., bottom 20% or 40%), serving as a direct measure of inequality between high- and low-income groups.

Question 2

Which one of the following is correct about the situation of global and regional poverty?

  1. A.There are clear indications that the conditions of global poverty has worsened over the past half century.
  2. B.Extreme poverty remains wide spread in developing world in past decades.
  3. C.Sub-Saharan Africa showed a remarkable achievement in eradicating poverty from 1950 to 2000.
  4. D.China has experienced virtually no rate of poverty reduction in the past decades.
Show the answer and explanation

Answer: B Extreme poverty remains wide spread in developing world in past decades.

Why

Despite overall global progress, extreme poverty has remained a persistent and widespread challenge in many parts of the developing world, particularly in Sub-Saharan Africa and parts of South Asia.

Question 3

Which one of the following is the main reason why women face poverty?

  1. A.They have less access to education, formal sector employment and social security.
  2. B.They are more likely to obtain formal employment in private companies.
  3. C.They have unlimited control over household income and resources.
  4. D.They have equal access to the resources that are necessary to create stable income.
Show the answer and explanation

Answer: A They have less access to education, formal sector employment and social security.

Why

Gender inequality in access to education, employment in the formal sector, and social protection programs limits women's earning potential and makes them disproportionately vulnerable to poverty.

Question 4

Which one of the following is the objective of the third five-year plan (1968-1973) during the Imperial Period?

  1. A.Developing strong infrastructure particularly in transportation and communication
  2. B.Accelerating agriculture development by promoting commercial agriculture
  3. C.Diversifying of production and introduction of modern processing methods
  4. D.Raising manufacturing and agro-industrial performance and expansion of educational opportunities
Show the answer and explanation

Answer: B Accelerating agriculture development by promoting commercial agriculture

Why

While the first and second five-year plans focused on infrastructure and manufacturing respectively, the Third Five-Year Plan (1968-1973) prioritized agricultural development, specifically the promotion of commercial agriculture.

Question 5

The 1974 revolution by Derg resulted in the establishment of a socialist state which aimed at the nationalization and restricting of the Ethiopian economy. The regime changed the previous national development strategy placing the major emphasis on a centrally planned economy. Which one of the following is correct about the major changes?

  1. A.The agriculture-led development was deployed as the main development strategy.
  2. B.The rural land and other productive assets were privatized, and land was distributed among farmers.
  3. C.The commercial farms were put under government control, and land tenancy was abolished.
  4. D.Rural lands are transferred to large manufacturers due shift to industry-led development policy.
Show the answer and explanation

Answer: C The commercial farms were put under government control, and land tenancy was abolished.

Why

Under the Derg regime's land reform proclamation of 1975, all rural land was nationalized, private commercial farms were converted into state farms, and land tenancy was completely abolished.

Question 6

To measure the general price level of an economy policy makers, use the GDP deflator, Consumer's Price Index (CPI) and Producer Price Index (PPI). Which one of the following is correct about these measures?

  1. A.The ratio of Nominal GDP to real GDP is equivalent to CPI.
  2. B.The ratio of Real GDP to GDP deflator is equivalent to Nominal GDP.
  3. C.The ratio of Nominal GDP to real GDP is equivalent to PPI.
  4. D.The ratio of Nominal GDP to real GDP is equivalent to GDP deflator.
Show the answer and explanation

Answer: D The ratio of Nominal GDP to real GDP is equivalent to GDP deflator.

Why

The GDP deflator is a measure of the price level calculated as the ratio of nominal GDP to real GDP (usually multiplied by 100).

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Economics papers from other years

2017 E.C. (2025)2016 E.C. (2024)2012 E.C. (2020)2011 E.C. (2019)

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Are these the real 2018 E.C. Economics entrance exam questions?

Yes. They come from the national university entrance exam in Economics that students sat in 2018 E.C. (2026). Our set holds 77 of its questions, each with its answer and an explanation that points back to the textbook.

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