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

The function of money do not include.

Question # 2

During period of inflation

Question # 3

The opportunity cost of holding currency decrease when

Question # 4

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 ______l and the IS curve Curve to shift to the.

Question # 5

The Central Bank controls money and credit with the exception of.

Question # 6

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 # 7

An autonomous increase in money demand.

Question # 8

A change in the money supply has a greater effect upon equilibrium income.

Question # 9

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

Question # 10

The ratio of debt to GDP will be larger

Question # 11

Which of the following measures is the best measure of money as a medium of exchange.

Question # 12

According to classical models, the level of employment is determined primarily by

Question # 13

Fiscal policy refers to the manipulation of government income and expenditure to.

Question # 14

An example of discretionary fiscal policy would be.

Question # 15

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 _______

Question # 16

Which of the following causes M1 demand is decrease.

Question # 17

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

Question # 18

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

Question # 19

A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.

Question # 20

The situation in which the imports are greater than exports is termed as.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Fiscal policy refers to.
A. The actions of the central bank in controlling the money supply
B. The government's altitude to taxation
C. The spending and taxing policies used by the government to influence the economy
D. The governments regulation of financial intermediaries.
2 The purpose of financial intermediaries is.
A. To allow more saving than investment
B. To discourage consumption spending
C. To collect income taxes for the government
D. To serve are middlemen between savers and borrowers.
3 If the central bank prints more 10 billion and spends them then as a direct result of this action.
A. M1 and M2 both increases
B. Neighed M1 nor M2 increase
C. M1 increase but M2 does not
D. M2 increased but M1 does not.
4 Monetary policy can affect output.
A. this statement is always true
B. This statements always false
C. This statement is true only in the short run
D. This statement is true only in the medium run and the long run
5 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
6 A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______
A. rise; Lm ; RIGHT
B. RISE ; is; right
C. fall ; IS; Left
D. rise ; LM; left
7 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.
8 A major advantage of monetary over fiscal policy is that monetary policy
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.
9 A sale of bonds by the central bank should cause.
A. A fall in the interest rate
B. An increase in the money supply
C. A decrease in the reserves of the commercial banks
D. An increase in the commercial banks loans to the public
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

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