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

Question # 2

Disposable income is obtained by subtracting ________ taxes from personal income

Question # 3

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

Question # 4

"Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.

Question # 5

The money multiple tells us teh ultimate increase in.

Question # 6

The main role of the Federal Reserve is to

Question # 7

During periods of negative demand shocks deficit target reductions such as those mandated in the Gramm Rudman Hollings Act would tend to.

Question # 8

A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

Question # 9

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

Question # 10

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

Question # 11

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

Question # 12

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.

Question # 13

What happens to the money supply if the deficit is financed by selling bonds to the central bank.

Question # 14

An item designed as money that is intrinsically worthless could the.

Question # 15

In an economy experience high interest rates and high unemployment The ISLM frame work predicts that _________ policy has been too.

Question # 16

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 # 17

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 # 18

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

Question # 19

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

Question # 20

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.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Fiscal policy refers to the manipulation of government income and expenditure to.
A. control the volume and price of money
B. Limit the rate of increaes in incomes
C. Effect the value of the dollar on world financial market.
D. Affect the level of total expenditure output and employment
2 A 15% VAT is a.
A. Proportional income tax
B. Fixed excise duty
C. Ad valorem indirect tax
D. None of the above
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
A. up ; right
B. up ; left
C. down ;left
D. down ; right
4 What happens to the money supply if the deficit is financed by selling bonds to the central bank.
A. The money supply increases
B. The money supply decreases
C. The money supply is unaffected
D. We cannot tell what will happen to the money supply
5 In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.
A. A relative large increase in Y, a smaller increate n P
B. A relative large increase in P, a smaller increase in Y
C. Both Y and P increasing with an percentage
D. Only Y increase
6 "Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.
A. A higher interests rate
B. A higher reserve requirement
C. a decrease in the money supply
D. An increase in the money supply
7 An autonomous increase in the value of the domestic exchange rate.
A. Increases output net exports and the interest rate.
B. Decreases output net exports and the interest rate
C. Decreases output and net exports and increases the interest rate.
D. Increase output and decreases net exports and the interest rate.
8 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500
9 Net taxes are.
A. Government expenditures minus government revenues.
B. Taxes paid by firms and households to the government minus the transfer payments made to firms and household.
C. Taxes paid by firms and household to the government plus transfer payments made to firms and hose holds.
D. Taxes paid by firms and hose hold to the government minus the cost of collecting the taxes.
10 A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.
A. fall ;LM; right
B. fall ;IS; Left
C. fall ;LM; Left
D. rise ;LM; Rifht

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