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

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PPSC Economics Topic 4 Monetary & Fiscal Policy

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Question # 1

The limit of an economy's total productive capacity at any given time is set by

Question # 2

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 # 3

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

Question # 4

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

Question # 5

How do the banks gain from this corporate behavior.

Question # 6

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

Question # 7

In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.

Question # 8

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 # 9

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 # 10

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

Question # 11

Which of the following would qualify as an aggregate demand shocks.

Question # 12

The parable of Riding a Switchback suggests that stabilizing policy.

Question # 13

Tax incidence is the

Question # 14

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

Question # 15

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

Question # 16

Which of the following would qualify as an aggregate supply shock.

Question # 17

The opportunity cost of holding currency decrease when

Question # 18

using money as a medium of exchange.

Question # 19

A shift in tastes loward foreign goods______ net exports and causes the quantity of aggregate output demanded to.

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 When a government prints money to finance its expenditures it is likely to cause
A. Unemployment
B. Inflation
C. Deflation
D. Reductions in the use of barter
2 An increase in government spending 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 ; LM ;Left
C. fall ; IS ; Left
D. rise ; IS ;right
3 Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.
A. Panel a
B. Panel d
C. Panel b
D. Panel e
4 According to classical models, the level of employment is determined primarily by
A. The level of aggregate demand for goods and services
B. Prices and wages
C. Government taxation
D. Government spending
5 An increase in the quantity of money supplied shifts the money supply curve to the_______ and the equilibrium interest rate
A. right ; falls
B. right ; rises
C. left ; falls
D. left ; rises
6 If the Central Bank wanted to decrease the quantity of money held by the public it would.
A. Sell government securities
B. Buy government securities
C. Lower the legal reserve requirement
D. Raise taxes
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
A. rise ; LM ;right
B. rise ; IS ; right
C. fall ; LM, Left
D. rise ; IS ; Left
8 The implementation lag for monetary policy is generally
A. Much longer than it is for fiscal policy
B. Unrelated to central bank action
C. The same as it is for fiscal policy
D. Much shorter than it is for fiscal policy.
9 A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate
A. right ; fall
B. right ; rises
C. left ; falls
D. left ; rises
10 The limit of an economy's total productive capacity at any given time is set by
A. The amount of money in circulation
B. Business demand for goods and services
C. The level of government spending and taxation
D. the quantity and quality of its productive resources

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