PPSC Economics Topic 4 MCQS Test Preparation

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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

Other things equal a decrease in autonomous consumption shifts the _____ curve to the

Question # 2

A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______

Question # 3

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

Question # 4

An example of nondiscretionary fiscal policy would be.

Question # 5

"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.

Question # 6

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

Question # 7

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

Question # 8

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

Question # 9

"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.

Question # 10

If the demand for money increase relative to the supply of money

Question # 11

By financial crowding our economists mean

Question # 12

To move from point E to point E1 is consistent with.

Question # 13

In the Keynesian cross diagram a decline 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 # 14

Knowledge of the money supply can lead to good predications of nominal GDP only

Question # 15

What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

Question # 16

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

Question # 17

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

Question # 18

Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.

Question # 19

If there is a financial panic and increased uncertainty about the return in the stock market and bond market what is the likely effect on money demand.

Question # 20

When a government prints money to finance its expenditures it is likely to cause

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Sr. # Question Answer
1 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.

2 The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.

A. Velocity of money

B. Nominal output

C.Overall price level

D. Stock of money

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

A. decreases ; rise

B. decreases ; fall

C.increases ; rise

D. increases ; fall

4 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

5 According to Marshall the basis of consumer surplus is.

A. Law of diminishing marginal utility.

B. Law of equal marginal utility

C.Law of proportions

D. All of the above

6 An autonomous increase in money demand.

A. Shift the IS curve to the right

B. Shifts the IS curve to the left

C.Shift the LM curve to the right

D. Shift the LM curve to the left

7 What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

A. The multiplier

B. The money multiplier

C.Required reserve ratio

D. Open market operations

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

A. They reflect the value of goods and services.

B. They are established by the government to control population 's needs

C.They categorize goods and services by their weight

D. Historically they have proved to the good predictors of futures unemployment.

9 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

10 If the demand for money increase relative to the supply of money

A. Interest rates will trend upward

B. Interest rates will trend downward

C.Interest rates are not affected by increases in money demand

D. Interest rates will behave randomly

11 A tax increase __________ disposable income ____ consumption expenditure and shifts the IS curve to the.

A. Increase; increases ; right

B. Increase ; decreases ; left

C.decreases ; increases ; left

D. decreases ; decreases ; left

12 The equilibrium level of income is.

A. Rs. 360

B. Rs.600

C.Rs.440

D. Rs.500

13 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.

A. rise ; left

B. rise ; right

C.fall ; left

D. fall ; right

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

A. IS ; right

B. Is ; Left

C.LM ; Left

D. LM ; Rfight

15 The function of money do not include.

A. an exchange of purchasing power

B. A unit of account

C.A medium of exchange

D. A store of value

16 The equilibrium level of saving is.

A. Rs.120

B. Rs.75

C.Rs.40

D. Rs.80

17 "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.

A. Upward

B. Down ward

C.To be zero

D. To match inflation

18 In the Keynesian corss diagra, an increase in autonomous consumer expenditure causes the aggregate demand function to shift up the equilibrium level of aggregate output to _______ and the IS curve to shift to the _______

A. rise ; left

B. rise ; right

C.fall ; left

D. fall ; right

19 A decline in taxes __ consumer expenditure and shifts the _ curve shifts to the.

A. Raises ; LM; Right

B. Lowers; IS ; left

C.raises ; IS; right

D. Lower ; LM; left

20 In the Keynesian cross diagram, an increase in autonomous consumer function to shift _______ the equilibrium level of aggregate output to rise and the IS curve to shift to the.

A. up ; left

B. up ; right

C.down ; left

D. down ; right

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