PPSC Economics Topic 4 Monetary & Fiscal Policy

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

A tax cut disposable income ___ consumption expenditure and shifts the IS curve to the.

Increases ; increases ; right A
Increases ; decreases ; left B
decreases ; increases ; left C
decreases ; decreases ; right D

Question # 2

An increase in oil prices, such as the oil shocks in the 70 s, lead to ___ there by causing _

A movement along the AS curve cost push inflation A
A leftward shift int he AS curve demand pull inflation. B
A right ward shift in the AS Curve cost push inflation C
a left ward shift in the AS curve cost push inflation D

Question # 3

A decline in the money______ shifts the LM curve to the causing the interest rate to rise and output to fall.

Demand ; right A
demand ; left B
supply ; right C
supply ; left D

Question # 4

A monetary action consistent with the central bank selling bonds in the open market would be.

An increase in the reserve ratio A
A reduction in the discount rate of interest B
An increase in government spending. C
a reduction in excise taxes D

Question # 5

The market price of bonds can fluctuate depending on

How many bonds were sold A
Who bought the bonds B
The amount of the coupon C
The interest rate D

Question # 6

in The Liquidity trap region

Fiscal policy is not effective A
Monetary policy is completely ineffective B
Monetary policy is completely effective C
Fiscal policy and monetary policy are equally effective D

Question # 7

An autonomous increase in money demand.

Shift the IS curve to the right A
Shifts the IS curve to the left B
Shift the LM curve to the right C
Shift the LM curve to the left D

Question # 8

Fiscal policy refers to.

The actions of the central bank in controlling the money supply A
The government's altitude to taxation B
The spending and taxing policies used by the government to influence the economy C
The governments regulation of financial intermediaries. D

Question # 9

During period of inflation

Those people who have fixed incomes benefit A
Every one's real income falls B
those people who enter long term wage agreements benefit C
Those people whose real income rises faster than the general price level benefit D

Question # 10

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

k increases and h increase A
k increases and h decrease B
k decrease and h increase C
k decrease and h decrease D

Question # 11

"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.

Tax rates A
The money supply B
Aggregate demand C
Government spending D

Question # 12

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.

rise ; left A
rise ; right B
fall ; left C
fall ; right D

Question # 13

How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.

Rs.3.5 billion A
Rs.1.5 billion B
Rs. 4.9 billion C
Rs.2.8 billion D

Question # 14

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

Sell government securities A
Buy government securities B
Lower the legal reserve requirement C
Raise taxes D

Question # 15

"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.

The multiplier A
The money multiplier B
Required reserve ratio C
Open market operations D

Question # 16

A decline in the money supply shifts the LM curve to the left causing the interest rate to ______ and output to_

rise ; rise A
rise ; fall B
fall ; rise C
fall ; fall D

Question # 17

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

IS ; right A
Is ; Left B
LM ; Left C
LM ; Rfight D

Question # 18

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

Panel a A
Panel b B
Panel c C
Panel d D

Question # 19

An increase in expected inflation is likely ot cause.

A decline in the demand for real balances A
an increase in the demand for real balances. B
No change i the demand for real balances C
No change in the demand for real balances only of the income elasticity of real money demand is zero. D

Question # 20

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

Productivity growth A
Money supply growth B
Labor growth C
Capital growth D

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PPSC Economics Topic 4 MCQS Test Preparation

MCQ's Test For PPSC Economics Topic 4 Monetary & Fiscal Policy

PPSC Economics Topic 4 Monetary & Fiscal Policy

A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.

An increase in oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____

A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

A monetary action consistent with the central bank selling bonds in the open market would be.

The market price of bonds can fluctuate depending on

in The Liquidity trap region

An autonomous increase in money demand.

Fiscal policy refers to.

During period of inflation

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

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.

How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.

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

A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___

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

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

An increase in expected inflation is likely ot cause.

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

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A tax cut disposable income ___ consumption expenditure and shifts the IS curve to the.

An increase in oil prices, such as the oil shocks in the 70 s, lead to ___ there by causing _

A decline in the money______ shifts the LM curve to the causing the interest rate to rise and output to fall.

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 decline in the money supply shifts the LM curve to the left causing the interest rate to ______ and output to_