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

00:00
Question # 1

The limit of an economy's total productive capacity at any given time is set by

Question # 2

Knowledge of the money supply can lead to good predications of nominal GDP only

Question # 3

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

Question # 4

Why would corporations want to achieve zero balances in their checking accounts.

Question # 5

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

Question # 6

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

Question # 7

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.

Question # 8

The largest source of tax revenue for the federal government is.

Question # 9

Money and income are.

Question # 10

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 # 11

The market price of bonds can fluctuate depending on

Question # 12

A major advantage of monetary over fiscal policy is that monetary policy

Question # 13

An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the.

Question # 14

In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.

Question # 15

A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.

Question # 16

The ____ lag for fiscal policy is generally _____ than it is for monetary policy.

Question # 17

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

Question # 18

How do the banks gain from this corporate behavior.

Question # 19

Total utility of a commodity is measured by which price of that commodity.

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 To move from point E to point E1 is consistent with.
A. Expectations of a constant price level
B. Adaptive expectations that have no adjustment for the period immediately following a change in the actual price
C. Rational expectations and NCM
D. A and B
2 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
3 The IMF is an agency charged with providing.
A. Technical assistance to stock market and financial market problems.
B. Loans for post World War II reconstruction
C. Short term credit for international balance of payments deficits
D. Bonds denominated in U.S. dollars as a loan to LDCs
4 using money as a medium of exchange.
A. Requires people to math goods wanted with goods available.
B. Reduces the range of feasible exchanges in the economy
C. Inhibits economic transactions
D. Reduces the need for barter in the economy.
5 A decrease in the legal reserve ratio from 25% to 20% will
A. Result in light money
B. Be contractionary
C. Increases excess reserves and the potential money multiplier
D. Decrease excess reserves and the potential money multiplier
6 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.
A. 40 percent and Rs. 4,000,000
B. 40 percent and Rs. 10,000,000
C. 25 percent and Rs. 2.500,000
D. 25 percent and Rs.10,000,000
7 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
8 The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.
A. Milton Friedman
B. Ronald reagan
C. Margaret Thatcher
D. John Maynard Keynes
9 A business cycle refers to.
A. Fluctuations in the general price level
B. changes in the long term growth pattern of the CPI
C. The ups and downs of real GDP
D. Fluctuations in the level of corporate.
10 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

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