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

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 # 2

A good that is used as a medium of exchange as well as being a consumption good is called.

Question # 3

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

Question # 4

If the State bank of Pakistan wished to pursue a light monetary policy it would.

Question # 5

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 # 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.

Question # 7

Under a fixed exchange rate system an expansionary fiscal policy leads to a

Question # 8

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

Question # 9

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 # 10

An example of nondiscretionary fiscal policy would be.

Question # 11

The Central Bank controls money and credit with the exception of.

Question # 12

" 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 # 13

Intermediate goods are meant for

Question # 14

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

Question # 15

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

Question # 16

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

Question # 17

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

Question # 18

The IMF is an agency charged with providing.

Question # 19

"Rising productivity does not in itself spell the end of inflation. With enough______ it would still be possible to whip prices into a froth the blank is best filled with.

Question # 20

If the demand for money increase relative to the supply of money

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Which policies are expenditure changing policies.
A. Currency devaluation and revaluation
B. Import quotas and tariffs
C. Monetary and fiscal policy
D. Wage and price controls
2 The opportunity cost of holding currency decreases when.
A. Income decreases
B. The interest rate on bonds decrease
C. Buying newly issued government bonds directly from the central bank
D. Buying newly issued government bonds directly to the central bank.
3 An increase in oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____
A. A movement along the AS curve cost push inflation
B. A leftward shift int he AS curve demand pull inflation.
C. A right ward shift in the AS Curve cost push inflation
D. a left ward shift in the AS curve cost push inflation
4 Monetary policy can affect output.
A. this statement is always true
B. This statements always false
C. This statement is true only in the short run
D. This statement is true only in the medium run and the long run
5 If the Bank of Pakistan wished to pursue a tight monetary policy is would.
A. Sell government securities on the open market.
B. Reduce the minimum reserve asset ratio
C. Buy government securities on the open market.
D. Lower interest rates
6 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
7 Money's primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization This function of money is called.
A. Store of value
B. Medium of exchange
C. Standard of deferred payment
D. Unit of account
8 An item designed as money that is intrinsically worthless could the.
A. A currency note
B. A silver coin
C. A barter item
D. Any tradeable commodity
9 A decrease in the legal reserve ratio from 25% to 20% will
A. Result in light money
B. Be contractionary
C. Increases excess reserves and the potential money multiplier
D. Decrease excess reserves and the potential money multiplier
10 If a perfectly competitive industry is in long run equilibrium all firms will
A. Have a marginal costs
B. Have identical supply curves
C. Operate at the point where marginal cost just covers all variable costs
D. Have equal fixed costs

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