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

Question # 2

An increase in expected inflation is likely ot cause.

Question # 3

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 ______ and the equilibrium level of aggregate output to ______

Question # 4

During periods of negative demand shocks deficit target reductions such as those mandated in the Gramm Rudman Hollings Act would tend to.

Question # 5

"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 # 6

According to classical models, the level of employment is determined primarily by

Question # 7

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

Question # 8

Credit constitutes.

Question # 9

If young busness professionals in Pakistan suddenly decide that driving japan made cars is an important status symbol net exports will tend to _____________causing aggregate demand to.

Question # 10

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

Question # 11

How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.

Question # 12

As the required reserve ratio is decreased the money multiplier.

Question # 13

An increases in the quantity of money supplied shifts the money supply curve to the _____and the LM curve to the

Question # 14

When there is no change in central banking holding of international reserve balances a country's

Question # 15

A business cycle refers to.

Question # 16

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

Question # 17

In the Keynesian cross diagram an increasing investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to rise and the IS curve to shift to the

Question # 18

The parable of Riding a Switchback suggests that stabilizing policy.

Question # 19

During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____

Question # 20

If the central Bank wished to Tighten money is would.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 "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
2 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.
3 The situation in which the imports are greater than exports is termed as.
A. Trade surplus
B. Trade deficit
C. Budget surplus
D. None
4 The limit of an economy's total productive capacity at any given time is set by
A. The amount of money in circulation
B. Business demand for goods and services
C. The level of government spending and taxation
D. the quantity and quality of its productive resources
5 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.
A. Increase the money growth rate slightly
B. Decrease the money growth rate slightly
C. Leave the money supply growth unchanged
D. Enact a one time slight decrease in the money supply
6 In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.
A. rise ; rise
B. rise; fall
C. fall ; rise
D. fall ; fall
7 An increase in spending those results from expansionary _______ policy cause the interest rate to.
A. fiscal ; rise
B. fiscal ; fall
C. incomes ; rise
D. income ; fall
8 "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
9 The investment demand curve shows the relationship between the levels of.
A. Investment and consumption
B. Consumption and Interest rate
C. Investment and interest rate
D. None
10 A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______
A. decreases ; rise
B. decreases ; fall
C. Increases ; rise
D. Increase ; fall

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