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 oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____

Question # 2

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

Question # 3

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

Question # 4

The negative effect on the economy that occurs when average tax rates increases because taxpayers have moved into higher income brackets during an expansion is.

Question # 5

In the Keynesian corss diagram, and cline 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.

Question # 6

The limit of an economy's total productive capacity at any given time is set by

Question # 7

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

Question # 8

During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____

Question # 9

Which of the following is not an important variable in growth accounting calculations.

Question # 10

If the central bank prints more 10 billion and spends them then as a direct result of this action.

Question # 11

Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.

Question # 12

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

Question # 13

The quantity of money demanded varies.

Question # 14

The largest source of tax revenue for the federal government is.

Question # 15

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

Question # 16

The parable of Riding a Switchback suggests that stabilizing policy.

Question # 17

"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 # 18

"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 # 19

" 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 # 20

Identify the three motives of money demand.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.
A. Demand ; right
B. demand ; left
C. supply ; right
D. supply ; left
2 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.
3 An increase in government spending causes the equilibrium level of aggregate output to_______ at any given interest rate and shifts the ____ curve to the
A. rise ; LM ; right
B. rise ; LM ;Left
C. fall ; IS ; Left
D. rise ; IS ;right
4 During periods of negative demand shocks deficit target reductions such as those mandated in the Gramm Rudman Hollings Act would tend to.
A. Stimulate the economy and increase empolyment.
B. Result in additional recessionary declines in employment and income
C. Stimulator defiance spending
D. Have an automatic stabilizing impact upon the economy
5 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
6 Credit constitutes.
A. Saving made available to borrowers
B. A form of liquid asset
C. bank loans converted into commodity money
D. Money used as a standard of deferred payment.
7 If the nominal money supply doubles while real money demand is unchanged what happens to the price level.
A. The price level increases by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
8 A state of government bonds by the central bank should cause
A. Bond prices to rise
B. an increase in the supply of money
C. An increase in chartered banks loans
D. A decrease in reserves of the banking system.
9 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
10 If young busness professionals in Pakistan suddenly decide that driving japan made cars is an important status symbol net exports will tend to _____________causing aggregate demand to.
A. fall ; fall
B. fall ; rise
C. rise ; fall
D. rise ; rise

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