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

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

In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.

Question # 2

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

Question # 3

Which of the followig does not shift the IS curve .

Question # 4

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the _______ curve to the __________

Question # 5

Commercial banks

Question # 6

Money or paper currency serves at least _______ functions.

Question # 7

The money multiple tells us teh ultimate increase in.

Question # 8

A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate

Question # 9

When your grandmother keeps her savings hidden under her mattress she is using money as.

Question # 10

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

Question # 11

In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to

Question # 12

An example of discretionary fiscal policy would be.

Question # 13

An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _______ relative to foreign goods and results in a ______ in net exports.

Question # 14

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.

Question # 15

An increase in expected inflation is likely ot cause.

Question # 16

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 # 17

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.

Question # 18

As a result of the increase in government expenditures disposable income increases by.

Question # 19

An autonomous increase in the value of the domestic exchange rate.

Question # 20

Short run contractionary Fiscal policy would result in.

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Sr.# Question Answer
1 A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.
A. Reduce
B. Increase
C. Have no effect on
D. Double
2 Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.
A. Money demand declines first then rises when inflation increases
B. Money demand rises
C. The overall effect is ambiguous
D. Money demand declines
3 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
4 A decrease in fully autonomous investment other things equal shifts the ______ curve to the
A. IS ; right
B. IS ; Left
C. LM ; Left
D. LM ; right
5 an asset that can easily be exchanged for goods and services is called a.
A. Financial asset
B. Barter like asset
C. Illegitimate asset
D. Liquid asset
6 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.
7 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
8 During period of inflation
A. Those people who have fixed incomes benefit
B. Every one's real income falls
C. those people who enter long term wage agreements benefit
D. Those people whose real income rises faster than the general price level benefit
9 Automatic stabilizers
A. Counter balance fluctuations in economic activity.
B. Reinforce fluctuations in economic activity
C. Do not occur when the economy falls into recession
D. Reduces the size of the deflationary gap
10 The intersection of the IS and LM curves captures.
A. The equilibrium of the demand and supply sides of the economy
B. the equivalence of monetary and fiscal policy
C. Joint equilibrium in the goods and money markets
D. All of the above

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