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

Which of the following is not an important variable in growth accounting calculations.

Question # 2

Why would corporations want to achieve zero balances in their checking accounts.

Question # 3

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

Question # 4

Money or paper currency serves at least _______ functions.

Question # 5

A sale of bonds by the central bank should cause.

Question # 6

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

Question # 7

Which of the following causes M1 demand is decrease.

Question # 8

A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.

Question # 9

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 # 10

Disposable income is obtained by subtracting ________ taxes from personal income

Question # 11

Why do people keep currency in their pockets when bank deposits pay interest.

Question # 12

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

Question # 13

What is the significance of underestimating transactions money.

Question # 14

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.

Question # 15

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

Question # 16

If the Central Bank wanted to decrease the quantity of money held by the public it would.

Question # 17

An increase in the money supply other thighs equal shifts the ______ curve to the

Question # 18

Factor that cause the IS curve to shift include.

Question # 19

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

Question # 20

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 A monetary expansion is characterized by
A. Rising output and interest rates
B. Rising output and falling interest rates.
C. Constant output and falling interest rates
D. Falling output and interest rates
2 The intersection of the IS and LM curves captures.
A. The equilibrium of the demand and supply sides of the economy
B. the equivalence of monetary and fiscal policy
C. Joint equilibrium in the goods and money markets
D. All of the above
3 The largest source of tax revenue for the federal government is.
A. The personal income tax
B. The social security tax
C. The property tax
D. The sales tax
4 During period of inflation
A. Those people who have fixed incomes benefit
B. Every one's real income falls
C. those people who enter long term wage agreements benefit
D. Those people whose real income rises faster than the general price level benefit
5 In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.
A. increases ; increase
B. increases ; decrease
C. decreases ; decreases
D. decreases ; increses
6 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
7 " A growing number of economists view the Fed's new willingness to take on more of the nation's debt as inflationary in the long run." This inflation worry is because.
A. The government may tax less
B. The debt may become excessive
C. The government may spend more
D. The money supply may increase excessively
8 A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the
A. decreases ; right
B. decrease ; left
C. increase ; right
D. increases ; left
9 The quantity of money demanded varies.
A. Directly with both prices and output
B. Inversely with both prices and output
C. Directly with prices and inversely with output
D. Inversely with prices and directly with output
10 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

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