PPSC Economics Topic 4 MCQS Test Preparation

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MCQ's Test For PPSC Economics Topic 4 Monetary & Fiscal Policy

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PPSC Economics Topic 4 Monetary & Fiscal Policy

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Question # 1

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the _______ curve to the __________

Question # 2

A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___

Question # 3

If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from.

Question # 4

An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the

Question # 5

During periods of negative demand shocks deficit target reductions such as those mandated in the Gramm Rudman Hollings Act would tend to.

Question # 6

a contractionary monetary policy

Question # 7

Monetary policy is concerned with influencing.

Question # 8

In the Keynesian cross diagram an increasing investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift _____ and the equilibrium level of aggregate output to.

Question # 9

An increase in money demand other thing equal shifts the ____ curve to the___

Question # 10

Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.

Question # 11

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

Question # 12

Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.

Question # 13

"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.

Question # 14

A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate

Question # 15

The largest source of tax revenue for the federal government is.

Question # 16

"The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.

Question # 17

In the Keynesian cross diagram a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to ______

Question # 18

An item designed as money that is intrinsically worthless could the.

Question # 19

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the ___ curve to the __________

Question # 20

The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.
A. Increase the money growth rate slightly
B. Decrease the money growth rate slightly
C. Leave the money supply growth unchanged
D. Enact a one time slight decrease in the money supply
2 In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to
A. Increase ; increase
B. Increase ; decrease
C. decrees ; decrease
D. decrease ;Increase
3 Factor that cause the IS curve to shift include.
A. Change in autocoups consumer spending
B. Change in taxes
C. Change in government spending
D. All of the above
4 Increasing the government budget deficit.
A. Increases output in the long run
B. Decreases output in the short run
C. Decreases output in the long run.
D. Decreases the interest rate in the medium run.
5 Which of the following would qualify as an aggregate demand shocks.
A. An unexpected increase in oil prices
B. A seasonally expected increase in oil prices
C. An unexpected reduction in consumer confidence
D. an anticipated tax cut
6 In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift down the equilibrium level of aggregate output to___________ and the IS curve to shift to the.
A. up ; left
B. up ; right
C. down ; left
D. down ; right
7 "Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.
A. A higher interests rate
B. A higher reserve requirement
C. a decrease in the money supply
D. An increase in the money supply
8 a contractionary monetary policy
A. Reduces interest rtes
B. Reduces real output
C. shifts the LM curve to the right
D. All of the above
9 Those who favor setting the target rate of inflation at about 3% believe.
A. The cost of moderate inflation can be minimized by indexing the tax system and bonds
B. that the cost of going to 0% is very low
C. That moderate inflation increases money illusion
D. Believe that moderate inflation aggravates the time inconsistency problem
10 Commercial banks
A. Are financial intermediaries that offer demand deposits.
B. Are owned by the Federal Reserve
C. Are non profit banking institutions
D. Are overseen by the Federal savings and loan insurance corporation.

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