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

Which of the followig does not shift the IS curve .

Question # 2

The implementation lag for monetary policy is generally

Question # 3

Which of the following causes M1 demand to decrease.

Question # 4

An increase in oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____

Question # 5

An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the.

Question # 6

A checking deposit held at a commercial bank is considered ______ of that bank.

Question # 7

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

Question # 8

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

Question # 9

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 rise and the IS curve to shift to the

Question # 10

In the Keynesian corss diagra, an increase in autonomous consumer expenditure causes the aggregate demand function to shift up the equilibrium level of aggregate output to _______ and the IS curve to shift to the _______

Question # 11

In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.

Question # 12

"The earlier predictions underestimated currency in circulation and treasury balances at the Fed, both of which drained reserves from the banking system" Lower reserves means.

Question # 13

If a perfectly competitive industry is in long run equilibrium all firms will

Question # 14

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

Question # 15

An increase in government spending causes the equilibrium level of aggregate output to_______ at any given interest rate and shifts the ____ curve to the

Question # 16

An autonomous increase in the value of the domestic exchange rate.

Question # 17

A decline in taxes __ consumer expenditure and shifts the _ curve shifts to the.

Question # 18

When considering any kind of economics indicator, prices are important because.

Question # 19

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 _____the equilibrium level of aggregate output to fall and the IS curve to shift to the.

Question # 20

The main source of interest profits for banks is.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when
A. k increases and h increase
B. k increases and h decrease
C. k decrease and h increase
D. k decrease and h decrease
2 A major advantage of monetary over fiscal policy is that monetary policty.
A. Can be put into effect more quickly
B. Affects all sectors of the economy equally
C. Authorities are quicker to see the need for policy
D. Has a more direct and predictable impact on spending.
3 As the interest sensitivity of investment spending increase.
A. Monetary policy has a larger effect on output
B. Fiscal policy has a larger effect on output
C. The multiplier increases
D. All of the above
4 Which policies are expenditure changing policies.
A. Currency devaluation and revaluation
B. Import quotas and tariffs
C. Monetary and fiscal policy
D. Wage and price controls
5 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500
6 An autonomous increase in the value of the domestic exchange rate.
A. Increases output net exports and the interest rate.
B. Decreases output net exports and the interest rate
C. Decreases output and net exports and increases the interest rate.
D. Increase output and decreases net exports and the interest rate.
7 Which of the following is not an important variable in growth accounting calculations.
A. Productivity growth
B. Money supply growth
C. Labor growth
D. Capital growth
8 If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____
A. decreases ; right
B. decreases ; left
C. Increases ; right
D. Increase ; left
9 "Far better for central bankers to get out of the fine tuning business instead they should d try to keep.
A. Taxes low
B. Budgets balanced
C. Money growth low
D. Government spending in check
10 A decrease in fully autonomous investment other things equal shifts the ______ curve to the
A. IS ; right
B. IS ; Left
C. LM ; Left
D. LM ; right

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