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 money demand increases

Question # 2

What is the significance of underestimating transactions money.

Question # 3

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

Question # 4

One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.

Question # 5

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

Question # 6

The automatic stabilization function of fiscial policy ensures that government expenditures _________ and government revenues __ during recessions.

Question # 7

An example of nondiscretionary fiscal policy would be.

Question # 8

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

Question # 9

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

Question # 10

If the central Bank wished to Tighten money is would.

Question # 11

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 # 12

A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the

Question # 13

Fiscal policy refers to.

Question # 14

The IMF is an agency charged with providing.

Question # 15

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

Question # 16

In the case of an expansionary ___ policy the interest rate rise while in the case of an expansionary _______ policy the interest rate falls.

Question # 17

Net taxes are.

Question # 18

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 ______l and the IS curve Curve to shift to the.

Question # 19

Which of the following part of M1

Question # 20

If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.

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Sr.# Question Answer
1 What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.
A. The multiplier
B. The money multiplier
C. Required reserve ratio
D. Open market operations
2 A monetary expansion is characterized by
A. Rising output and interest rates
B. Rising output and falling interest rates.
C. Constant output and falling interest rates
D. Falling output and interest rates
3 A decrease iin money demand other thing equal shifts the _____ curve to the
A. IS ; right
B. Is ; Left
C. LM ; Left
D. LM ; Rfight
4 The purpose of fiscal policy is to
A. Alter the direction of the economy
B. Change people's attitudes toward governemnt
C. Educate people as to the importance of economics
D. Offer insight into the way thing work
5 The market price of bonds can fluctuate depending on
A. How many bonds were sold
B. Who bought the bonds
C. The amount of the coupon
D. The interest rate
6 In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.
A. A relative large increase in Y, a smaller increate n P
B. A relative large increase in P, a smaller increase in Y
C. Both Y and P increasing with an percentage
D. Only Y increase
7 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
8 Monetary policy is concerned with influencing.
A. The general level of money wages
B. The level of government expenditure
C. The price and availability of money
D. The level of shares on the stock market
9 If the demand for money increase relative to the supply of money
A. Interest rates will trend upward
B. Interest rates will trend downward
C. Interest rates are not affected by increases in money demand
D. Interest rates will behave randomly
10 An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the
A. Net exports LM right
B. Net exports LM left
C. Money demand IS right
D. Money demand LM left
11 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500
12 "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.
A. A higher interests rate
B. A higher reserve requirement
C. a decrease in the money supply
D. An increase in the money supply
13 What happens to the money supply if the deficit is financed by selling bonds to the general public.
A. The money supply increaes
B. The money supply decreases
C. The money supply is unaffected
D. We cannot tell what will happen to the money supply
14 During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____
A. LM ; rightward
B. IS ; rightwards
C. LM ; Leftward
D. IS ; Leftward
15 Fiscal policy refers to.
A. The actions of the central bank in controlling the money supply
B. The government's altitude to taxation
C. The spending and taxing policies used by the government to influence the economy
D. The governments regulation of financial intermediaries.
16 Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.
A. Left ward ; LM
B. Right ; LM
C. Left ward ; IS
D. Left ward ; AD
17 A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______
A. decreases ; rise
B. decreases ; fall
C. Increases ; rise
D. Increase ; fall
18 A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the
A. right ; left
B. right ; right
C. left ; left
D. left ; right
19 If the Bank of Pakistan wished to pursue an expansionary monetary policy it would.
A. Increase the minimum reserve asset ratio
B. Sell government securities on the open market
C. Buy government securities on the open market
D. Raise interest rates.
20 "Although he didn't say so, this may ultimately compet the central bank to resort increasingly to managing the money supply by managing banks excess cash reserves the stuff from which the banks create loans". How would the central bank manages these excess reserves.
A. By buying bonds
B. By selling bonds
C. By changing reserve requirements
D. All of the above

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