PPSC Economics Topic 4 MCQS Test Preparation

Punjab Public Service Commission, PPSC takes the competitive exam to offer the deserving candidates suitable positions in several governmental organizations. Candidates who are willing to apply for the coming PPSC examination session with the subject of Economics are advised to start their preparation as soon as possible. The reason behind this endorsement is that candidates with exceptional results secure suitable positions and the exceptional result is a result of exceptional preparation.

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

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

  • Total Questions20

  • Time Allowed20

Start Test Download PDF

PPSC Economics Topic 4 Monetary & Fiscal Policy

00:00
Question # 1

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

Question # 2

In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.

Question # 3

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 # 4

An increase in the quantity of money supplied shifts the money supply curve to the_______ and the equilibrium interest rate

Question # 5

If there is a financial panic and increased uncertainty about the return in the stock market and bond market what is the likely effect on money demand.

Question # 6

Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.

Question # 7

Which of the followig does not shift the IS curve .

Question # 8

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 # 9

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

Question # 10

An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.

Question # 11

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

Question # 12

Which policies are expenditure changing policies.

Question # 13

Other things equal a decrease in autonomous consumption shifts the _____ curve to the

Question # 14

A monetary action consistent with the central bank selling bonds in the open market would be.

Question # 15

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 # 16

The purpose of fiscal policy is to

Question # 17

Which of the following causes M1 demand to decrease.

Question # 18

Which of the following part of M1

Question # 19

The near term effect of an unexpected sale of bonds by the central bank is.

Question # 20

If firms paying employees monthly began paying them weakly then the demand for money would.

Submit

Prepare Complete Set Wise PPSC Economics Topic 4 Monetary & Fiscal Policy MCQs Online With Answers


Top Scorers Of PPSC Economics Topic 4 Monetary & Fiscal Policy MCQ`s Test

  • S
    Shiza Amir 25 - May - 2022 02 Min 08 Sec 18/20
  • K
    khurram shazzz 02 - Mar - 2022 04 Min 47 Sec 18/20
  • S
    Shahida 01 - Sep - 2021 06 Min 25 Sec 17/20
  • A
    Ayesha siddiqa 02 - Jul - 2021 19 Min 10 Sec 17/20
  • T
    Tayyeba 29 - Jun - 2021 09 Min 28 Sec 16/20
  • F
    Funny world with amazing facts 22 - Apr - 2022 06 Min 10 Sec 15/20
  • S
    sidra Naeem 22 - May - 2022 13 Min 44 Sec 13/20
  • A
    Abdul Qayyum 25 - May - 2024 07 Min 53 Sec 12/20
  • H
    Hassan Mehmood 03 - Apr - 2022 08 Min 20 Sec 12/20
  • S
    Shama Suleman 21 - May - 2022 12 Min 21 Sec 12/20
  • A
    Amjad Ali 07 - Jun - 2023 12 Min 49 Sec 12/20
  • S
    Shad Ali Shah 27 - Jul - 2024 15 Min 17 Sec 12/20
  • D
    DJ DJ 12 - Aug - 2022 11 Min 02 Sec 11/20
  • Z
    zaheer hussain 18 - Jan - 2024 14 Min 06 Sec 11/20
  • M
    Mahnoor NaSir 24 - May - 2022 07 Min 27 Sec 9/20
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 "The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.

A. Tax rates

B. The money supply

C.Aggregate demand

D. Government spending

3 A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______

A. rise ; LM ;right

B. rise ; IS ; right

C.Fall ; LM ; left

D. rise ;IS; right

4 Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

A. The IS curve shifts left ward

B. The IS curve shifts right ward

C.The money supply increase

D. Taxes are cut

5 A state of government bonds by the central bank should cause

A. Bond prices to rise

B. an increase in the supply of money

C.An increase in chartered banks loans

D. A decrease in reserves of the banking system.

6 What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

A. The multiplier

B. The money multiplier

C.Required reserve ratio

D. Open market operations

7 Actual equilibrium is Rs. 1,500 billion and full employment is Rs. 2,500 MPC = 0.75 taxes are zero , and prices are adjustable To eliminate the observed deflationary gap , the government should.

A. Increase G by Rs.1,000

B. Decrease G by Rs.250

C.Increase G by less than Rs.100

D. Decrease G by more than Rs.250 but less than Rs.1000

8 "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.

A. Weaken fiscal policy

B. Avoid monetary policy errors

C.Strengthen the impact of monetary policy

D. Ensure the independence of the central bank

9 In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.

A. rise ; rise

B. rise; fall

C.fall ; rise

D. fall ; fall

10 "Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.

A. The multiplier

B. The money multiplier

C.Required reserve ratio

D. Open market operations

11 According to Marshall the basis of consumer surplus is.

A. Law of diminishing marginal utility.

B. Law of equal marginal utility

C.Law of proportions

D. All of the above

12 The main source of interest profits for banks is.

A. Checking account fees

B. Loans

C.Government securities

D. Savigng accounts

13 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 __________

A. rise ; LM ;right

B. rise ; IS ; right

C.Fall ; LM ; left

D. rise ;IS; Left

14 A decrease iin money demand other thing equal shifts the _____ curve to the

A. IS ; right

B. Is ; Left

C.LM ; Left

D. LM ; Rfight

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

A. Stimulate the economy and increase empolyment.

B. Result in additional recessionary declines in employment and income

C.Stimulator defiance spending

D. Have an automatic stabilizing impact upon the economy

16 The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

A. Milton Friedman

B. Ronald reagan

C.Margaret Thatcher

D. John Maynard Keynes

17 The use of money is more efficient than barter because the introduction of money

A. Reduces the need for economic specialization

B. Reduces the need to exchange goods

C.Reduce the need for other stores of value

D. Reduces transaction costs

18 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 _______

A. rise ; left

B. rise ; right

C.fall ; left

D. fall ; right

19 The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.

A. 40 percent and Rs. 4,000,000

B. 40 percent and Rs. 10,000,000

C.25 percent and Rs. 2.500,000

D. 25 percent and Rs.10,000,000

20 A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the

A. right ; left

B. right ; right

C.left ; left

D. left ; right

Test Questions

Is this page helpful?