JAMB UTME - Economics - 2002
Question 1 Report
Excess demand inflation can be controlled through?
Answer Details
Excess demand inflation can be controlled through contractionary fiscal policy. This means that the government can reduce the amount of money it spends, increase taxes, or both, to reduce demand in the economy. By doing this, the government can reduce the pressure on prices caused by excess demand, ultimately helping to control inflation. Contractionary trade policy is not directly related to controlling inflation, but rather to regulating international trade. Conversely, expansionary fiscal and monetary policies, which involve increasing government spending and reducing interest rates respectively, are used to stimulate demand and promote economic growth, and are not effective in controlling inflation.
Question 2 Report
Import substitution aims at?
Answer Details
Import substitution aims at substituting imports with domestically produced goods. This is done by promoting and protecting local industries, and by reducing or eliminating the reliance on imported goods. The goal is to reduce the country's dependence on foreign products and to promote domestic industries by encouraging them to produce goods that were previously imported. This is achieved through government policies such as tariffs, subsidies, and regulations that protect local industries from foreign competition. The aim of import substitution is to improve the balance of payments, reduce foreign exchange expenditure, and promote economic self-sufficiency. By reducing imports and promoting domestic production, import substitution aims to create a more balanced economy that is less vulnerable to external shocks and fluctuations in global markets.
Question 3 Report
In a centrally planned economy, the economic problem of deciding what to produce is dependent on?
Answer Details
Question 4 Report
The demand for factors of production is an example of?
Answer Details
The demand for factors of production is an example of derived demand. Factors of production are resources used in the production process, including land, labor, capital, and entrepreneurship. The demand for these factors of production is not direct but derived from the demand for the goods and services that they produce. For instance, when the demand for a particular product increases, firms would require more factors of production, such as labor and capital, to increase the production of the product. Similarly, when the demand for a product decreases, firms would require fewer factors of production. Therefore, the correct answer is "derived demand."
Question 6 Report
The middlemen in the chain of distribution are?
Answer Details
The middlemen in the chain of distribution are wholesalers and retailers. When a product is manufactured, it needs to be distributed to the consumers through a chain of distribution. The chain of distribution includes various intermediaries, including middlemen, who help move the product from the manufacturer to the consumer. Wholesalers are businesses that purchase goods in bulk from the manufacturer and sell them to retailers or other businesses. They buy large quantities of products from the manufacturer at a discounted price and sell them to retailers or other businesses at a slightly higher price. Retailers are businesses that sell products directly to the consumers. They purchase products from the wholesaler or directly from the manufacturer and sell them to the end-user or consumers. Therefore, the correct answer is "wholesalers and retailers."
Question 7 Report
The equilibrium wage in an economy is determined by the?
Answer Details
The equilibrium wage in an economy is determined by the supply and demand for labor. This means that the wage rate is set at the point where the number of workers willing to work at that wage equals the number of jobs available at that wage. When the supply of labor is greater than the demand for labor, wages will be driven down. Conversely, when the demand for labor is greater than the supply of labor, wages will be pushed up. Factors such as public service, worker's union, and rate of inflation can influence the supply and demand for labor, but ultimately it is the balance between the two that determines the equilibrium wage.
Question 8 Report
The stock exchange is a market for the buying and selling of?
Answer Details
The stock exchange is a market where investors can buy and sell securities, which are financial instruments that represent a claim on some underlying asset or stream of income. These securities include stocks (also known as shares), bonds, and other types of financial instruments. When a company wants to raise money, it can issue stocks to the public. Investors can then buy these stocks, which represent partial ownership in the company. Existing stocks can also be bought and sold on the stock exchange. In summary, the stock exchange is a market for the buying and selling of securities, including new and existing shares. It is an important way for companies to raise capital and for investors to trade securities and potentially earn profits.
Question 9 Report
As a country gets more developed, the percentage of labour engaged in agriculture tends to?
Answer Details
As a country develops, the percentage of labor engaged in agriculture tends to decrease steadily. This is because as the economy grows, new industries and job opportunities emerge, which attract labor from agriculture. Additionally, improvements in agricultural technology and techniques lead to increased productivity and efficiency, reducing the need for labor in agriculture. As a result, people tend to migrate from agriculture to other sectors such as manufacturing, services, and trade, leading to a decrease in the percentage of labor engaged in agriculture.
Question 10 Report
The elasticity of supply of perishable goods is?
Answer Details
The elasticity of supply of perishable goods is usually inelastic, meaning that the quantity supplied of these goods does not respond significantly to changes in their price. This is because perishable goods have a short shelf life and cannot be stored for long periods of time. As a result, suppliers are constrained by the amount of goods they can produce within a given time frame, regardless of the price. For example, a farmer may only be able to harvest a certain amount of strawberries in a day, and that limit cannot be exceeded by raising the price of strawberries. Therefore, the supply of perishable goods is usually inelastic, although there may be some variation depending on the specific product and market conditions.
Question 11 Report
The primary objective of the NDIC is to?
Answer Details
The primary objective of the Nigeria Deposit Insurance Corporation (NDIC) is to give protection to bank depositors. The NDIC is an agency of the Nigerian government that provides insurance protection to depositors in case their bank fails or becomes insolvent. The NDIC provides this protection by insuring all deposit liabilities of licensed banks and other financial institutions that are operating in Nigeria. This means that if a bank fails or is unable to meet its obligations to its depositors, the NDIC will reimburse the depositors up to a specified limit. The aim of this protection is to enhance public confidence in the banking system, promote financial stability, and ensure that depositors are not left without recourse in the event of a bank failure. Therefore, the primary objective of the NDIC is to give protection to bank depositors, and to promote a sound and stable banking system in Nigeria.
Question 12 Report
Liquidity preference refers to the?
Answer Details
Liquidity preference refers to the demand to hold money as assets rather than as stocks. This means that people prefer to hold money in a form that can be easily converted into goods and services, rather than in other assets such as stocks or bonds. Liquidity preference is based on the idea that holding money provides a sense of security and flexibility in uncertain economic times. While the other options may also be related to the demand for money in different ways, liquidity preference specifically refers to the desire to hold money as a means of financial security and flexibility.
Question 13 Report
In the diagrams, the opportunity cost of a unit of cotton in terms of cocoa is
Answer Details
Question 14 Report
The present privatization policy in Nigeria is aimed at?
Answer Details
The present privatization policy in Nigeria is aimed at increasing efficiency in production. This means that the government is selling off state-owned enterprises to private individuals or companies who can manage them better and run them more efficiently. By doing this, the government hopes to improve the quality and quantity of goods and services available to Nigerians, and ultimately boost economic growth. While reducing income inequality and poverty alleviation may be indirect benefits of privatization, the primary objective is to make production more efficient.
Question 15 Report
In the diagram above, what is the excess demand at the price of ₦60
Answer Details
In the given diagram, the excess demand at a certain price level is the difference between the quantity demanded and the quantity supplied at that price level. To determine the excess demand at the price of ₦60, we can find the intersection point of the demand and supply curves at this price level. This point represents the quantity demanded and supplied at this price. If we look at the graph, we can see that at the price of ₦60, the quantity demanded is 800 while the quantity supplied is 500. Therefore, the excess demand at the price of ₦60 is calculated as: Excess demand = Quantity demanded - Quantity supplied Excess demand = 800 - 500 Excess demand = 300 So the answer is 300, which is the difference between the quantity demanded and supplied at the price of ₦60.
Question 16 Report
If the country's GNP in the current year is N50 billion, and the GNP in the base year N50 billion, the GNP deflector is?
Answer Details
Question 17 Report
In a closed economy, the marginal propensity to consume is 0.6 and the average propensity to consume 0.8. The value of the multiplier is?
Answer Details
The multiplier is a measure of the change in national income that results from a change in autonomous expenditure (spending that is independent of income). The formula for the multiplier is: Multiplier = 1 / (1 - MPC) where MPC is the marginal propensity to consume. In this case, the MPC is 0.6, so we can plug this into the formula: Multiplier = 1 / (1 - 0.6) Multiplier = 1 / 0.4 Multiplier = 2.5 Therefore, the value of the multiplier is 2.5. The average propensity to consume (APC) is the fraction of income that is spent on consumption. It is calculated by dividing total consumption by total income. In this case, the APC is 0.8, which means that for every N1 earned, N0.80 is spent on consumption. In summary, the value of the multiplier is 2.5, which means that for every N1 increase in autonomous expenditure, national income will increase by N2.50. The APC is 0.8, which means that for every N1 earned, N0.80 is spent on consumption.
Question 18 Report
As a firm increases its output, the average fixed cost?
Answer Details
As a firm increases its output, the average fixed cost tends to fall continuously. This is because fixed costs are spread over a larger quantity of output, leading to a decrease in the average fixed cost. For example, if a factory has a fixed cost of $10,000 per month and produces 1,000 units, the average fixed cost per unit is $10. However, if the factory increases its production to 2,000 units, the average fixed cost per unit decreases to $5, since the fixed cost is spread over a larger quantity of output. Therefore, as the firm increases its output, the average fixed cost decreases continuously, while the variable cost per unit may increase due to the law of diminishing marginal returns.
Question 19 Report
One of the roles of NNPC in the production and refining of crude oil is to?
Answer Details
One of the roles of NNPC (Nigerian National Petroleum Corporation) in the production and refining of crude oil is to satisfy the domestic consumption of petroleum products. The NNPC is a government-owned corporation that oversees the exploration, production, and refining of crude oil in Nigeria. One of its primary objectives is to ensure that there is an adequate supply of petroleum products, such as gasoline and diesel, to meet the domestic demand in Nigeria. This is done by refining crude oil into these products and distributing them to various parts of the country. In addition to satisfying domestic demand, the NNPC also plays a role in securing maximum government revenue and regulating prices. The corporation is responsible for managing the sale of crude oil and petroleum products on behalf of the Nigerian government. It also regulates prices to ensure that they are affordable for consumers while still generating revenue for the government. Preventing the smuggling of petroleum products and protecting local operators in the petroleum industry are also important objectives of the NNPC. Smuggling can lead to shortages of petroleum products and loss of revenue for the government, while protecting local operators can help to promote growth and development in the industry. However, the specific role mentioned in the question is to satisfy the domestic consumption of petroleum products, as this is one of the most important functions of the NNPC in ensuring that the needs of the Nigerian people are met.
Question 20 Report
In the short-run a firm marginal cost curve above the point of shut-down is its?
Answer Details
In the short-run, a firm's marginal cost curve above the point of shut-down is its supply curve. The marginal cost curve represents the additional cost of producing one more unit of output. In the short-run, a firm has fixed costs (such as rent, loan payments, and salaries) that cannot be changed, and variable costs (such as raw materials and labor) that can be adjusted to some extent. If the price of the good or service that the firm produces is higher than the variable cost of producing it, the firm will continue to produce and sell the good or service, even if it is not covering its fixed costs. However, if the price falls below the variable cost, the firm will shut down production in the short-run, because it cannot cover even its variable costs. In this context, the point of shut-down is the point at which the price of the good or service falls below the minimum average variable cost of production. This means that the firm cannot cover its variable costs and will incur losses. Therefore, if the marginal cost curve is above the point of shut-down, the firm will continue to produce and supply the good or service as long as the price is above the minimum average variable cost. This region of the marginal cost curve above the point of shut-down is the firm's short-run supply curve.
Question 21 Report
Under conditions of perfect competition, a firm's supply curve is determined by its?
Answer Details
In perfect competition, a firm's supply curve is determined by its marginal cost curve. The marginal cost curve represents the additional cost of producing one more unit of output. In a perfectly competitive market, firms are price-takers and cannot influence the market price. Therefore, the optimal output level for a firm is where its marginal cost equals the market price. As the market price changes, the optimal output level for the firm also changes. Thus, the firm's supply curve is the portion of its marginal cost curve that lies above the market price. Therefore, in perfect competition, the firm's supply curve is determined by its marginal cost curve.
Question 22 Report
The Malthusian theory of population growth is often said to be?
Answer Details
The Malthusian theory of population growth is often said to be pessimistic. The Malthusian theory was proposed by economist Thomas Robert Malthus in the late 18th century. The theory suggests that population growth tends to outstrip the growth of resources, leading to a point where there will not be enough resources to support the population. Malthus believed that this situation would result in a "natural check" on population growth, such as famine, war, or disease. Malthus's theory is considered pessimistic because it suggests that the world's population will eventually reach a point where resources will be scarce, and there will be widespread suffering and hardship. However, the theory has been criticized for being too simplistic and for not taking into account technological advancements that can increase resource availability and improve efficiency. In summary, the Malthusian theory of population growth is often said to be pessimistic because it predicts a future where resources are scarce and there will be widespread suffering and hardship due to population growth outpacing resource growth.
Question 23 Report
The benefits that accrue to a firm as a result of an improvement in the industry it belongs to are called?
Answer Details
The benefits that accrue to a firm as a result of an improvement in the industry it belongs to are called external economies. External economies refer to the advantages that a firm gains from the overall growth and development of the industry or location in which it operates. These benefits are external to the firm and arise from factors such as the availability of skilled labor, specialized suppliers, infrastructure, and transportation networks. For example, if a new transportation hub is built in a city where a firm operates, the firm could benefit from improved access to markets, lower transportation costs, and an expanded labor pool. These benefits are not the result of the firm's own actions, but rather of the overall growth and development of the industry or location in which it operates. In contrast, internal economies of scale refer to the cost advantages that a firm gains from increasing its own output or scale of operations, such as lower per-unit costs due to higher production volumes. Economies of scale refer to the cost advantages that a firm gains from the overall growth and development of the industry or location in which it operates, including both internal and external factors.
Question 24 Report
One of the major factors militating against industrialization in Nigeria is the?
Answer Details
One of the major factors militating against industrialization in Nigeria is the inadequacy of infrastructural facilities. Infrastructural facilities such as roads, power supply, water supply, and communication networks are essential for the development of industries. They provide the necessary support system for industries to function effectively and efficiently. In Nigeria, the inadequacy of these facilities has been a major challenge for industrialization. The poor state of roads in Nigeria, for example, makes it difficult for industries to transport raw materials and finished products. The unreliable power supply also affects the productivity of industries, as they have to rely on alternative sources of energy such as generators, which increase the cost of production. The inadequate water supply and communication networks also affect industrial productivity. The absence of government participation, frequent breakdown of equipment, and failure to get foreign partners and supporters are also factors that can militate against industrialization in Nigeria. However, the inadequacy of infrastructural facilities is one of the most significant factors that hinder the development of industries in Nigeria.
Question 25 Report
ECOWAS has taken a giant step towards economic integration by?
Answer Details
ECOWAS has taken a giant step towards economic integration by increasing economic stability among member states. ECOWAS (Economic Community of West African States) is a regional organization of West African countries established in 1975 with the goal of promoting economic integration and cooperation among its member states. One of the ways it has achieved this goal is by working towards increasing economic stability among member states. This has been done through various measures, such as promoting free trade among member states, reducing trade barriers, and harmonizing economic policies. By increasing economic stability, member states are better able to attract foreign investment, create jobs, and improve the standard of living for their citizens. For example, ECOWAS has established a Common External Tariff (CET) to encourage free trade among member states and reduce trade barriers. It has also worked to harmonize macroeconomic policies and promote regional cooperation in areas such as energy, transportation, and telecommunications. These efforts have helped to create a more stable and integrated economic environment in West Africa.
Question 26 Report
In the diagram above, the marginal rate of substitution of X for Y, for a movement from S to T is
Answer Details
Question 27 Report
One way of correcting the balance of payments problem of a country is to?
Answer Details
Question 28 Report
A shift in supply curve indicates that a different quantity will be supplied at each possible price because?
Answer Details
A shift in supply curve indicates that other factors than price have changed, and as a result, a different quantity will be supplied at each possible price. These other factors could include changes in production costs, technology, or government policies that affect the production process. When these factors change, they can cause the overall supply of a good or service to either increase or decrease, which will be reflected in the shift of the supply curve. It is important to note that a shift in the supply curve is different from a movement along the supply curve, which is caused by a change in the price of the good or service. In other words, a shift in the supply curve is caused by changes in factors other than the price, while a movement along the supply curve is caused by a change in price.
Question 30 Report
The economic policy of deregulation is aimed at encouraging?
Answer Details
Deregulation is an economic policy aimed at removing or reducing government regulations and restrictions in a particular industry or sector. The main goal of deregulation is to encourage competition within the industry, which should lead to lower prices, greater efficiency, and innovation. By reducing the barriers to entry, deregulation aims to make it easier for new businesses to enter the market and compete with existing firms. In a competitive market structure, firms must constantly strive to improve their products and services to attract and retain customers. This leads to greater efficiency and innovation, which benefits both consumers and the economy as a whole. Therefore, the economic policy of deregulation is aimed at encouraging a competitive market structure.
Question 32 Report
National Income estimates can be used to?
Answer Details
National income estimates can be used to compare a country's growth rate with that of another over a period of time. National income estimates refer to the total income earned by a country's residents, including individuals, firms, and the government, in a given period, usually a year. By comparing the national income estimates of two or more countries over a period of time, analysts can determine which country is growing at a faster rate than the others. This information is useful for making important economic decisions, such as determining which countries to invest in or which policies to implement. It also helps in assessing the level of development of a country's economy. Therefore, the correct answer is "compare a country's growth rate with that of another over a period of time."
Question 33 Report
The short-run equilibrium output for a monopolist is determined by the?
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Question 34 Report
The solution to the problem of double coincidence of wants requires a buyer and seller whose demands are precisely?
Answer Details
The solution to the problem of double coincidence of wants requires a buyer and seller whose demands are complementary. The double coincidence of wants is a problem that arises in barter economies where there is no commonly accepted medium of exchange. It refers to the situation where a buyer wants to purchase a good from a seller, but the seller does not want the goods or services that the buyer has to offer in exchange. In this situation, trade cannot take place. The solution to the problem of double coincidence of wants is to find a medium of exchange that is widely accepted, such as money. Alternatively, the demands of the buyer and seller can be complementary, which means that what one wants to sell is exactly what the other wants to buy. For example, if a baker wants to buy flour and a farmer wants to buy bread, their demands are complementary, and they can trade with each other without the need for money. The other options are not the correct answers because they do not address the issue of complementary demands, which is the key to solving the problem of double coincidence of wants. Competitive demands are those that compete with each other, such as two buyers bidding for the same item. Composite demands refer to goods that are made up of several components, such as a computer. Supplementary demands refer to goods that are used together, such as a car and gasoline.
Question 35 Report
One of the major criticisms of the 1992-1968 National development Plan was that?
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Question 36 Report
In Nigeria, the bank that can correctly be described as a unit bank is?
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Question 37 Report
Creeping inflation implies that there is a?
Answer Details
Creeping inflation implies that there is a gentle and persistent increase in the general price level. This means that over time, the average price of goods and services in an economy gradually increases, but at a relatively slow pace. This type of inflation is also known as "mild" inflation, and can be caused by a variety of factors such as increases in production costs or increases in the money supply. While creeping inflation is generally considered to be less harmful than rapid inflation, it can still have negative effects on the economy, including reducing the purchasing power of consumers and eroding the value of savings.
Question 38 Report
One of the problems arising from the localization of industries is?
Answer Details
One of the problems arising from the localization of industries is structural unemployment. When industries are localized in a particular area, workers with specific skills and experience are required to work in those industries. If those industries decline or relocate, the workers may find it difficult to secure employment elsewhere due to their specialized skills. This can lead to structural unemployment, which occurs when there is a mismatch between the skills that workers have and the skills that employers require. Structural unemployment can have long-term effects on the economy, as it can lead to a decrease in productivity and an increase in social problems. Therefore, it is important for policymakers to address the issue of structural unemployment and to invest in education and training programs to help workers develop skills that are in demand in the current job market.
Question 39 Report
One of the reason for an exceptional demand curve is the?
Answer Details
One of the reasons for an exceptional demand curve is the expectation of a future change in price. An exceptional demand curve is one that is not typical of most demand curves. It occurs when consumers are willing to pay more for a product or service, even as the price of that product or service increases. This is in contrast to a typical demand curve, which shows that as the price of a product or service increases, the quantity demanded decreases. The expectation of a future change in price can cause an exceptional demand curve. If consumers believe that the price of a product or service will increase in the future, they may be willing to pay more for it now in order to avoid paying even more later. This can cause the demand curve to shift upwards, as consumers are willing to pay a higher price for the product at every quantity. For example, if consumers believe that the price of a new video game console will increase in the future, they may be willing to pay more for it now in order to avoid paying even more later. This can cause the demand curve for the video game console to shift upwards, as consumers are willing to pay a higher price for the console at every quantity.
Question 40 Report
External finance for a limited liability company is mainly sourced through?
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Question 41 Report
The effect of an increase in demand for a commodity accompanied by a decrease in supply will be to?
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Question 42 Report
The major purpose of African Development Bank is to?
Answer Details
The major purpose of the African Development Bank is to provide loans and assistance for infrastructural development in Africa. This includes financing projects related to transportation, energy, water and sanitation, as well as promoting regional integration and private sector development. The aim is to improve the quality of life for people living in Africa by fostering sustainable economic growth and reducing poverty. While the bank may also provide loans for trade development or to support development banks in distress, its core mission is to support the development of infrastructure across the African continent. It does not specifically focus on educating peasant farmers in new techniques.
Question 43 Report
If goods P and Q are purchased by a consumer, a fall in the price P with the price Q unchanged will cause the budget line to
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Question 44 Report
A student has N30.00 with which to buy a ruler costing N18.00 and an exercise book costing N25.00. If he buys the exercise book, his opportunity cost is?
Answer Details
If the student has N30.00 with which to buy a ruler costing N18.00 and an exercise book costing N25.00, but chooses to buy the exercise book, his opportunity cost is the next best alternative foregone, which is the ruler. Opportunity cost refers to the value of the next best alternative that is forgone when choosing between two or more options. In this case, the student has two options: buying a ruler or an exercise book. If the student chooses to buy the exercise book, then the opportunity cost is the value of the ruler, which is N18.00. Therefore, the correct answer is "the ruler."
Question 45 Report
Improved labour efficiency can be measured by?
Answer Details
Improved labor efficiency can be measured by an increase in the output-input ratio. This means that with the same amount of input (e.g., labor hours), the output (e.g., goods or services produced) is greater, which indicates that labor is being used more efficiently. On the other hand, a decrease in the output-input ratio would indicate that labor efficiency has decreased, meaning that more input is required to produce the same output. If the input-output ratio remains constant, it means that the same amount of input produces the same amount of output, which could indicate that labor efficiency has neither improved nor worsened. Finally, an increase in the input-output ratio would mean that more input (e.g., labor hours) is required to produce the same amount of output, which would indicate a decrease in labor efficiency.
Question 46 Report
If the growth rate of available resources continuously outpaces that of the population, a country will eventually experience?
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Question 47 Report
The types, sources and uses of government income are mainly concerned with?
Answer Details
The types, sources, and uses of government income are mainly concerned with public revenue. Public revenue refers to the money that the government collects from various sources such as taxes, fees, fines, and tariffs. The types of taxes that generate public revenue include income tax, sales tax, property tax, and corporate tax. The government uses this revenue to fund public expenditures such as infrastructure development, education, healthcare, defense, and social welfare programs. Public budget and public finance are related concepts that refer to the overall management of government finances, including revenue collection and expenditure planning. The public budget is a plan that outlines the government's revenue sources and expenditure priorities for a specific period, typically one year. Public finance, on the other hand, is a broader term that encompasses all aspects of government finance, including revenue collection, expenditure planning, borrowing, and debt management. In summary, the types, sources, and uses of government income are mainly concerned with public revenue, which is the money collected by the government from various sources to fund public expenditures that benefit society as a whole.
Question 48 Report
Some of the key indicators of underdevelopment in a country are?
Answer Details
The key indicators of underdevelopment in a country are poverty, low level of literacy, and low income. Poverty is a major indicator of underdevelopment in a country. It is a condition in which people lack the basic necessities of life, such as food, water, shelter, and clothing. Poverty is often accompanied by poor health, limited access to education, and low levels of income. Low levels of literacy are also a significant indicator of underdevelopment. Education is essential for the development of human capital and the acquisition of skills needed for economic growth. Countries with low literacy rates typically have limited access to education, which can hinder their ability to develop and compete in the global economy. Low income is another key indicator of underdevelopment. Low-income countries have limited resources to invest in infrastructure, education, and healthcare, which can make it difficult for them to attract foreign investment or compete in global markets. As a result, these countries often struggle to provide basic services to their citizens, such as healthcare, sanitation, and clean water. While unemployment is also a critical issue in underdeveloped countries, it is not considered a key indicator of underdevelopment in the same way as poverty, low literacy levels, and low income. This is because many underdeveloped countries have high levels of unemployment due to their limited economic opportunities and lack of resources.
Question 49 Report
In the pie chart below, the percentage for children is equivalent to
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Question 50 Report
Insurance companies invest mainly in instruments trade on the?
Answer Details
Insurance companies primarily invest in instruments traded on the capital market. The capital market is a market where long-term financial instruments, such as bonds and stocks, are traded. Insurance companies typically invest their premiums and other funds in financial instruments with long-term maturity dates, and the capital market is the best place to find such instruments. Investing in the capital market allows insurance companies to earn a return on their investments, which helps them pay claims and maintain their financial stability. Additionally, the capital market provides insurance companies with a way to diversify their investments, reducing their exposure to risk. Therefore, the correct answer is "capital market."
