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

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 # 2

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

Question # 3

Money is

Question # 4

An example of discretionary fiscal policy would be.

Question # 5

"Transactions" money is money used as a

Question # 6

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

Question # 7

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

Question # 8

As the required reserve ratio is decreased the money multiplier.

Question # 9

The opportunity cost of holding currency decreases when.

Question # 10

Per Capita income is obtained by dividing National income by

Question # 11

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 # 12

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

Question # 13

"The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.

Question # 14

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

Question # 15

If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.

Question # 16

What's the most common way for a central bank to reduce the money supply.

Question # 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.

Question # 18

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

Question # 19

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

Question # 20

Tax incidence is the

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to
A. increase ; increase
B. Increase ; decrease
C. decrease ; decrease
D. decrease ; increase
2 If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____
A. decreases ; right
B. decreases ; left
C. Increases ; right
D. Increase ; left
3 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
4 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
5 "Transactions" money is money used as a
A. Store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment
6 The opportunity cost of holding currency decreases when.
A. Income decreases
B. The interest rate on bonds decrease
C. Buying newly issued government bonds directly from the central bank
D. Buying newly issued government bonds directly to the central bank.
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 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.
10 If the central Bank wished to Tighten money is would.
A. Lower the discount rate
B. Sell government securities
C. Lower the legal reserve ratio
D. Lower the tax rate

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