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

As the interest sensitivity of investment spending increase.

Question # 2

The central bank and the government are working against each other if as the government cuts taxes the central bank

Question # 3

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

Question # 4

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 # 5

Money is

Question # 6

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 # 7

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 ______ and the equilibrium level of aggregate output to ______

Question # 8

An increase in the money supply other thighs equal shifts the ______ curve to the

Question # 9

Factor that cause the IS curve to shift include.

Question # 10

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

Question # 11

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

Question # 12

The situation in which the imports are greater than exports is termed as.

Question # 13

A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______

Question # 14

An increase in spending those results from expansionary _______ policy cause the interest rate to.

Question # 15

How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.

Question # 16

"The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.

Question # 17

An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise

Question # 18

An example of discretionary fiscal policy would be.

Question # 19

If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.

Question # 20

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Following the work of _____________ in the 1960s, and the controversy associated with these views in the 1970s, there was a revival of interest by economists and government in monetary policy.
A. Milton Friedman
B. Ronald Reagan
C. Margaret Thatcher
D. John Maynard Keynes
2 When a government prints money to finance its expenditures it is likely to cause
A. Unemployment
B. Inflation
C. Deflation
D. Reductions in the use of barter
3 The ____ lag for fiscal policy is generally _____ than it is for monetary policy.
A. Recognition ; shorter
B. Recognition ; longer
C. Implementation ; shorter
D. Implementation ; longer
4 Why do people keep currency in their pockets when bank deposits pay interest.
A. Because banks might steal your money
B. Because currency is more liquid
C. Because bank deposits lose value due to inflation
D. Because bank deposits lose value due to exchange in interest rates.
5 A tax increase __________ disposable income ____ consumption expenditure and shifts the IS curve to the.
A. Increase; increases ; right
B. Increase ; decreases ; left
C. decreases ; increases ; left
D. decreases ; decreases ; left
6 The parable of Riding a Switchback suggests that stabilizing policy.
A. Is not sufficiently stimulating or contra citing the economy at any time
B. Is desirable
C. Is effective
D. Is stimulating or contracting the economy at the wrong times.
7 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
8 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
9 If the Central Bank wanted to decrease the quantity of money held by the public it would.
A. Sell government securities
B. Buy government securities
C. Lower the legal reserve requirement
D. Raise taxes
10 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.

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