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

An example of discretionary fiscal policy would be.

Question # 2

Which of the following causes M1 demand is decrease.

Question # 3

"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.

Question # 4

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.

Question # 5

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

Question # 6

At any given level of the interest rate expectations are likely to be___________ optimistic and planned investment is likely to be ______ when _________ is growing rapidly than when it is growing slowly or falling.

Question # 7

Why do people keep currency in their pockets when bank deposits pay interest.

Question # 8

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

Question # 9

There are ______ methods of measuring GDP

Question # 10

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.

Question # 11

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

Question # 12

An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise

Question # 13

How do the banks gain from this corporate behavior.

Question # 14

An example of nondiscretionary fiscal policy would be.

Question # 15

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 # 16

A monetary expansion is characterized by

Question # 17

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

Question # 18

When a government prints money to finance its expenditures it is likely to cause

Question # 19

Believers in the monetarist rule assert that

Question # 20

What is the significance of underestimating transactions money.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Money and income are.
A. Mirror image of each other
B. Two quite different concepts
C. Both measured as a per annum flow
D. Two ways of looking at the same thing.
2 Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.
A. Money demand rises proportionately to the rise in wealth.
B. Money demand rises, but less than proportionately to the rise in wealth.
C. The overall effect in ambiguous
D. Money demand declines
3 An increase in oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____
A. A movement along the AS curve cost push inflation
B. A leftward shift int he AS curve demand pull inflation.
C. A right ward shift in the AS Curve cost push inflation
D. a left ward shift in the AS curve cost push inflation
4 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
A. up ; right
B. up ; left
C. down ;left
D. down ; right
5 A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate
A. right ; fall
B. right ; rises
C. left ; falls
D. left ; rises
6 One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.
A. store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment
7 In the Keynesian cross diagram, an increase in autonomous consumer function to shift _______ the equilibrium level of aggregate output to rise and the IS curve to shift to the.
A. up ; left
B. up ; right
C. down ; left
D. down ; right
8 When a government prints money to finance its expenditures it is likely to cause
A. Unemployment
B. Inflation
C. Deflation
D. Reductions in the use of barter
9 A major advantage of monetary over fiscal policy is that monetary policty.
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.
10 Factor that cause the IS curve to shift include.
A. Change in autocoups consumer spending
B. Change in taxes
C. Change in government spending
D. All of the above

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