PPSC Economics Topic 4 Monetary & Fiscal Policy

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PPSC Economics Chapter 4 Important MCQ's

Sr.#	Question	Answer
1	In the ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.	A. IS ;right B. IS ;Left C. LM ; Left D. LM ; Right
2	According to classical models, the level of employment is determined primarily by	A. The level of aggregate demand for goods and services B. Prices and wages C. Government taxation D. Government spending
3	Short run contractionary Fiscal policy would result in.	A. Aggregate demand moving to the right B. Aggregate supply moving to the right C. Aggregate demand moving to the left D. Aggregate supply moving to the left
4	"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.	A. Weaken fiscal policy B. Avoid monetary policy errors C. Strengthen the impact of monetary policy D. Ensure the independence of the central bank
5	An increase in spending those results from expansionary _______ policy cause the interest rate to.	A. fiscal ; rise B. fiscal ; fall C. incomes ; rise D. income ; fall
6	When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.	A. more ; iincreases B. less ; increases C. more ; decreases D. more ; increases
7	You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.	A. If you live in a 1st best world. B. If you live in a 2nd best world C. If the tax rates on some of the items are prohibitively high D. Either of the above
8	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
9	The automatic stabilization function of fiscial policy ensures that government expenditures _________ and government revenues __ during recessions.	A. decrease ; decrease B. decrease ; increase C. Increase ; decrease D. increase ; increase
10	When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.	A. 0.25 B. 4 C. 0.4 D. Rs.4 billion

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PPSC Economics Topic 4 MCQS Test Preparation

MCQ's Test For PPSC Economics Topic 4 Monetary & Fiscal Policy

PPSC Economics Topic 4 Monetary & Fiscal Policy

Fiscal policy refers to.

Money is

The market price of bonds can fluctuate depending on

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

During period of inflation

Tax incidence is the

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

If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from.

There are _______ major instrument of monetary policy.

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

A shift in tastes toward Pakistan goods ________ net exports and causes the IS curve to shift to the.

To move from point E to point E1 is consistent with.

An autonomous rise in the value of the Rupee makes Pakistan goods _____ expensive relative to foresight goods which ______ net exports

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

If the central Bank wished to Tighten money is would.

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.

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.

an asset that can easily be exchanged for goods and services is called a.

The quantity of money demanded varies.

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

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Topic Test

Top Scorers Of PPSC Economics Topic 4 Monetary & Fiscal Policy MCQ`s Test

PPSC Economics Chapter 4 Important MCQ's

Test Questions

An autonomous rise in the value of the Rupee makes Pakistan goods _ expensive relative to foresight goods which __ net exports

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.