PPSC Economics Topic 4 Monetary & Fiscal Policy

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PPSC Economics Chapter 4 Important MCQ's

Sr.#	Question	Answer
1	The negative effect on the economy that occurs when average tax rates increases because taxpayers have moved into higher income brackets during an expansion is.	A. Fiscal drag B. The Laffer curve C. Bracket creep D. Debt burden
2	A monetary action consistent with the central bank selling bonds in the open market would be.	A. An increase in the reserve ratio B. A reduction in the discount rate of interest C. An increase in government spending. D. a reduction in excise taxes
3	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
4	Believers in the monetarist rule assert that	A. Lags are long and variable B. the economy cna be stabilized by automatic mechanisms C. The central bank should keep the money supply growth constant D. All of the above
5	Why do people keep currency in their pockets when bank deposits pay interest.	A. Because banks might steal your money B. Because currency is more liquid C. Because bank deposits lose value due to inflation D. Because bank deposits lose value due to exchange in interest rates.
6	When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.	A. Is unchaged B. Increase by Rs.100,000 C. Increases by Rs. 1,000,000 D. None of these
7	"Transactions" money is money used as a	A. Store of value B. Unit of account C. Medium of exchange D. Standard of deferred payment
8	The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.	A. Bank's line of credit B. Reserve ratio C. Current ratio D. Money multipiler
9	In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to.	A. up ; rise B. up ; fall C. down ; rise D. down ; fall
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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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

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

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

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.

Which of the following causes M1 demand is decrease.

A decline in the value of the rupee makes Pakistan goods cheaper relative to foreign goods, resulting in a _________ in net exports and a ________shifts of the IS curve.

Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.

In economics money refers to

Which of the following persons would be considered unemployed.

As the required reserve ratio is decreased the money multiplier.

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

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

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.

The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.

As the interest sensitivity of investment spending increase.

There are _______ major instrument of monetary policy.

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

In the Keynesian corss diagram, and cline 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 decrease iin money demand other thing equal shifts the _____ curve to the

Employment tends to _______ whwn aggregate output.

The money multiple tells us teh ultimate increase in.

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Top Scorers Of PPSC Economics Topic 4 Monetary & Fiscal Policy MCQ`s Test

PPSC Economics Chapter 4 Important MCQ's

Test Questions

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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 value of the rupee makes Pakistan goods cheaper relative to foreign goods, resulting in a _ in net exports and a shifts of the IS curve.

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.