PPSC Economics Topic 4 Monetary & Fiscal Policy

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

In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.

Question # 2

"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.

Question # 3

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

Question # 4

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

Question # 5

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 # 6

In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to

Question # 7

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

Question # 8

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 # 9

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

Question # 10

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 _______

Question # 11

The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.

Question # 12

The investment demand curve shows the relationship between the levels of.

Question # 13

If the central Bank wished to Tighten money is would.

Question # 14

The quantity of money demanded increases with income Thus if income increases the opportunity cost of holding money demand and re establish equilibrium in the money market This relation is captured by.

Question # 15

The opportunity cost of holding currency decrease when

Question # 16

The ____ lag for fiscal policy is generally _____ than it is for monetary policy.

Question # 17

Net taxes are.

Question # 18

A shift in tastes toward Pakistan goods ________ net exports and causes the IS curve to shift to the.

Question # 19

The main source of interest profits for banks is.

Question # 20

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Weighted monetary aggregates
A. Ignore the fact that some assets are more money like than others.
B. Are constructed by simply adding up the outstanding amounts of various types of asssets
C. Give greater weight to currency than to savings deposits
D. Value coins more than currency.
2 Given fixed exchange rates assume Pakistan initiates contractionary monetary ad fiscal policies to combat inflation. these policies will also.
A. Reduce a balance of payments surplus
B. Reduce a balance of payments deficit
C. Increases both imports and exports
D. Decrease both imports and exports
3 A Political problem with discretionary fiscal policy is the.
A. Contractionary bias
B. Big state bias
C. Expansionary bias
D. Over reaction bias
4 In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.
A. up ; rise
B. up ; fall
C. down ; rise
D. down ; fall
5 One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.
A. store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment
6 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.
7 Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.
A. Low ; smaller ; high
B. Low ; larger ; high
C. low ; smaller ; middle
D. High ; larger ; low
8 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500
9 Fiscal policy refers to the manipulation of government income and expenditure to.
A. control the volume and price of money
B. Limit the rate of increaes in incomes
C. Effect the value of the dollar on world financial market.
D. Affect the level of total expenditure output and employment
10 "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.
A. Lower interest rates
B. Lower money supply
C. Lower unemployment
D. Higher inflation

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