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

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PPSC Economics Topic 4 Monetary & Fiscal Policy

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Question # 1

"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 # 2

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 # 3

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 # 4

During period of inflation

Question # 5

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

Question # 6

When there is no change in central banking holding of international reserve balances a country's

Question # 7

The function of money do not include.

Question # 8

The equilibrium level of saving is.

Question # 9

"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 # 10

The implementation lag for monetary policy is generally

Question # 11

As the required reserve ratio is decreased the money multiplier.

Question # 12

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

Question # 13

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

Question # 14

A major advantage of monetary over fiscal policy is that monetary policy

Question # 15

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.

Question # 16

You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.

Question # 17

A decrease in the legal reserve ratio from 25% to 20% will

Question # 18

The real money demand doubles while the nominal money supply is unchanged what happens to the price level.

Question # 19

Per Capita income is obtained by dividing National income by

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.
A. Positively ; positively
B. Positively ; negatively
C. negatively ; positively
D. negatively ; negatively
2 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
3 An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.
A. rise ; rise
B. rise ; fall
C. fall ; rise
D. fall ; fall
4 The IS curve shifts to the left when
A. Taxes increase
B. Government spending increase
C. The money supply increases
D. All of the above occur
5 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
6 "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
7 If the Bank of Pakistan wished to pursue a tight monetary policy is would.
A. Sell government securities on the open market.
B. Reduce the minimum reserve asset ratio
C. Buy government securities on the open market.
D. Lower interest rates
8 "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
9 The ratio of debt to GDP will be larger
A. The lower the real interest rate
B. The lower the growth rate of output
C. The lower the in initial debt ratio
D. The lower the ratio of the primary deficit to GDP
10 A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.
A. Reduce
B. Increase
C. Have no effect on
D. Double

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