PPSC Economics Topic 4 MCQS Test Preparation

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MCQ's Test For PPSC Economics Topic 4 Monetary & Fiscal Policy

Try The 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

Which of the following measures is the best measure of money as a medium of exchange.

Question # 2

The economic logic behind granting central bank's independence from governmental the conduct of monetary policy is.

Question # 3

When considering any kind of economics indicator, prices are important because.

Question # 4

As the interest sensitivity of money demand increases

Question # 5

According to Marshall the basis of consumer surplus is.

Question # 6

Which of the following causes M1 demand is decrease.

Question # 7

The board pumps money out of the economy by

Question # 8

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

Question # 9

Fiscal policy refers to.

Question # 10

" 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.

Question # 11

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

Question # 12

A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______

Question # 13

In the Keynesian corss diagra, an increase in autonomous consumer expenditure causes the aggregate demand function to shift up the equilibrium level of aggregate output to _______ and the IS curve to shift to the _______

Question # 14

An increase in expected inflation is likely ot cause.

Question # 15

In economics money refers to

Question # 16

To move from point E to point E1 is consistent with.

Question # 17

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

Question # 18

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 fall and the IS curve to shift to the.

Question # 19

Believers in the monetarist rule assert that

Question # 20

a contractionary monetary policy

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Sr.# Question Answer
1 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.
A. rise ; rise
B. rise; fall
C. fall ; rise
D. fall ; fall
2 If the original money supply is MSo and the original demand for money is MDo then
A. The equilibrium interest rate and savings are 5% and 50
B. The money supply is 200 and equilibrium income is 500
C. The equilibrium interest rate and income are 5% and 600
D. The speculative demand is 25
3 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
4 Which of the following would qualify as an aggregate demand shocks.
A. An unexpected increase in oil prices
B. A seasonally expected increase in oil prices
C. An unexpected reduction in consumer confidence
D. an anticipated tax cut
5 Knowledge of the money supply can lead to good predications of nominal GDP only
A. If the price level is stable
B. If the money supply is stable
C. Over very short periods of time
D. If the determinants of velocity are known
6 A major advantage of monetary over fiscal policy is that monetary policy
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.
7 An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.
A. rise ; rise
B. rise ; fall
C. fall ; rise
D. fall ; fall
8 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
9 A decline in taxes __ consumer expenditure and shifts the _ curve shifts to the.
A. Raises ; LM; Right
B. Lowers; IS ; left
C. raises ; IS; right
D. Lower ; LM; left
10 The real money demand doubles while the nominal money supply is unchanged what happens to the price level.
A. The price level increase by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
11 Fiscal policy is purposeful movements in _____designed to direct an economy
A. Interest rate
B. Legal structures
C. Government regulations
D. D Government spending and taxes
12 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
13 When your grandmother keeps her savings hidden under her mattress she is using money as.
A. a standard of deferred panyment
B. A comfortable thing for sleeping
C. A medium of exchange
D. A store of value
14 When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.
A. Increase ; right ; fall; increase
B. increases ; left ; rise ; decrease
C. decreases ; left ;rise ; increases
D. decreases ; left ; fall ; increases
15 Other things equal a decrease in autonomous consumption shifts the _____ curve to the
A. IS ; RIGHT
B. IS ; Left
C. LM ; Left
D. LF ; Right
16 Factors that cause the IS curve to shift include.
A. Changes in autonomous consumer spending
B. Changes in government spending
C. Changes in investment spending related to business confidence
D. All of the above
17 The quantity of money demanded varies
A. Directly with both prices and output
B. Inversely with both prices and output
C. Directly with prices and inversely with output
D. Inversely with prices and directly with output
18 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
19 "The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.
A. Tax rates
B. The money supply
C. Aggregate demand
D. Government spending
20 According to the Laffer curve as tax rates increase tax revenues.
A. Decrease continuously.
B. Initially decrease and then increase
C. Rise continuously
D. Initially increase and then decrease

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