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

If the nominal money supply doubles while real money demand is unchanged what happens to the price level.

Question # 2

An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.

Question # 3

If a perfectly competitive industry is in long run equilibrium all firms will

Question # 4

In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift _____ the equilibrium level of aggregate output to fall, and the IS curve to shift to the.

Question # 5

Actual equilibrium is Rs. 1,500 billion and full employment is Rs. 2,500 MPC = 0.75 taxes are zero , and prices are adjustable To eliminate the observed deflationary gap , the government should.

Question # 6

Given fixed exchange rates assume Pakistan initiates contractionary monetary ad fiscal policies to combat inflation. these policies will also.

Question # 7

Following the work of _____________ in the 1960s, and the controversy associated with these views in the 1970s, there was a revival of interest by economists and government in monetary policy.

Question # 8

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 # 9

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

Question # 10

If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____

Question # 11

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

Question # 12

Time lags which often erode effectiveness of monetary and fiscal policy measures represent.

Question # 13

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.

Question # 14

If the Bank of Pakistan wished to pursue an expansionary monetary policy it would.

Question # 15

The IMF is an agency charged with providing.

Question # 16

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 # 17

The main source of interest profits for banks is.

Question # 18

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

Question # 19

Disposable income is obtained by subtracting ________ taxes from personal income

Question # 20

Which of the following events will lead to a decrease in the demand for money.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
A. rise,; left
B. rise ;right
C. fall ; left
D. fall ; right
2 As the required reserve ratio is decreased the money multiplier.
A. Could either increase or decrease
B. Remains the same as long as banks hold no excess reserves
C. Increase
D. Decreases
3 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
4 " A growing number of economists view the Fed's new willingness to take on more of the nation's debt as inflationary in the long run." This inflation worry is because.
A. The government may tax less
B. The debt may become excessive
C. The government may spend more
D. The money supply may increase excessively
5 You move some of your savings account balance into your checking account.
A. M2 falls and M1 rises
B. M1 falls and M2 rises
C. M1 and M2 are unchanged
D. M1 rises and M2 remains unchanged
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 Monetary policy can affect output.
A. this statement is always true
B. This statements always false
C. This statement is true only in the short run
D. This statement is true only in the medium run and the long run
8 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
9 Which of the following causes M1 demand to decrease.
A. A fall in the tax rate
B. An increase in income
C. A fall in the interest rate
D. An increase in the use of credit cards
10 In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.
A. rise ; rise
B. rise ; fall
C. fall ; rise
D. fall ; fall

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