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 good that is used as a medium of exchange as well as being a consumption good is called.

Question # 2

In an economy experience high interest rates and high unemployment The ISLM frame work predicts that _________ policy has been too.

Question # 3

If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.

Question # 4

If the Bank of Pakistan wished to pursue a tight monetary policy is would.

Question # 5

Disposable income is obtained by subtracting ________ taxes from personal income

Question # 6

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

Question # 7

The equilibrium level of income is.

Question # 8

A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the

Question # 9

in The Liquidity trap region

Question # 10

An item designed as money that is intrinsically worthless could the.

Question # 11

"Transactions" money is money used as a

Question # 12

The rate of which central bank lends to commercial banks is known as

Question # 13

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

Question # 14

The main source of interest profits for banks is.

Question # 15

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

Question # 16

An increase in spending those results from expansionary _______ policy cause the interest rate to.

Question # 17

Suppose velocity is constant and the real income elasticity of the demand for money is less than one then estimating inflation as money growth rate minus real growth rate.

Question # 18

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 # 19

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

Question # 20

There are _______ major instrument of monetary policy.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when
A. k increases and h increase
B. k increases and h decrease
C. k decrease and h increase
D. k decrease and h decrease
2 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
3 Which of the following would qualify as an aggregate supply shock.
A. An unexpected increase in oil prices
B. Seasonally expected increase in oil prices
C. An unexpected reduction in consumer confidence
D. an anticipated tax cut
4 As the interest sensitivity of money demand increases
A. The multiplier term increases
B. Fiscal policy has a greater effect on output
C. Monetary policy has a smaller effect on output
D. All of the above
5 Identify the three motives of money demand.
A. Accumulative
B. Speculative precautionary
C. Speculative transaction precautionary
D. Precautionary special trisection
6 By financial crowding our economists mean
A. What the government borrows cannot be used for private investment
B. Government borrowing drives up interest rates.
C. Bank of England controls on commercial bank lending
D. Credit rationing
7 If the Bank of Pakistan wished to pursue an expansionary monetary policy it would.
A. Increase the minimum reserve asset ratio
B. Sell government securities on the open market
C. Buy government securities on the open market
D. Raise interest rates.
8 In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to
A. Increase ; increase
B. Increase ; decrease
C. decrees ; decrease
D. decrease ;Increase
9 An item designed as money that is intrinsically worthless could the.
A. A currency note
B. A silver coin
C. A barter item
D. Any tradeable commodity
10 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.
A. Panel a
B. Panel b
C. Panel c
D. Panel d

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