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

How do the banks gain from this corporate behavior.

Question # 2

If the central bank prints more 10 billion and spends them then as a direct result of this action.

Question # 3

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 # 4

An example of discretionary fiscal policy would be.

Question # 5

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 # 6

In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.

Question # 7

If there is a financial panic and increased uncertainty about the return in the stock market and bond market what is the likely effect on money demand.

Question # 8

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.

Question # 9

In economics money refers to

Question # 10

An increase in money demand other thing equal shifts the ____ curve to the___

Question # 11

According to Marshall the basis of consumer surplus is.

Question # 12

What happens to the money supply if the deficit is financed by selling bonds to the general public.

Question # 13

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

Question # 14

A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___

Question # 15

Which school of economic thought suggested that one possible cause of inflation was a push from the cost side.

Question # 16

If the Bank of Pakistan wished to pursue a tight monetary policy is would.

Question # 17

An autonomous increase in money demand.

Question # 18

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

Question # 19

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.

Question # 20

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.
A. Increases ; increases ; right
B. Increases ; decreases ; left
C. decreases ; increases ; left
D. decreases ; decreases ; right
2 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
3 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
4 What's the most common way for a central bank to reduce the money supply.
A. Collect higher taxes
B. Sell bonds to the public
C. Buy bounds from the government
D. Buy bonds from the public
5 In the Keynesian cross diagram, an 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
6 The main role of the Federal Reserve is to
A. Administer the government on the state of the economy
B. Overses the operations of the financial system and monetary management.
C. Establish the value of the dollar and official interest rates
D. Provide advice to the government on the state of the economy.
7 According to Marshall the basis of consumer surplus is.
A. Law of diminishing marginal utility.
B. Law of equal marginal utility
C. Law of proportions
D. All of the above
8 Which school of economic thought suggested that one possible cause of inflation was a push from the cost side.
A. New classical economists
B. Monetarists
C. Marxists
D. Keynesians
9 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.
A. fall ; leftward
B. rise ; leftward
C. fall ; rightward
D. rise ; rightward
10 The opportunity cost of holding currency decrease when
A. Income decreases
B. The interest rate on bonds decreases
C. The interest rate on money decrease wealth decrease
D. Wealth decreases

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