PPSC Economics Topic 4 Monetary & Fiscal Policy

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PPSC Economics Chapter 4 Important MCQ's

Sr.#	Question	Answer
1	A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate	A. right ; fall B. right ; rises C. left ; falls D. left ; rises
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	In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to.	A. up ; rise B. up ; fall C. down ; rise D. down ; fall
4	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 __________	A. rise ; LM ;right B. rise ; IS ; right C. Fall ; LM ; left D. rise ;IS; Left
5	Factors that cause the IS curve to shift include.	A. Changes in autonomous consumer spending B. Changes in government spending C. Changes in investment spending related to business confidence D. All of the above
6	"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
7	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.
8	Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.	A. Money demand declines first then rises when inflation increases B. Money demand rises C. The overall effect is ambiguous D. Money demand declines
9	By financial crowding our economists mean	A. What the government borrows cannot be used for private investment B. Government borrowing drives up interest rates. C. Bank of England controls on commercial bank lending D. Credit rationing
10	According to the supply side model a reduction in the tax rate.	A. Could reduce the size of any budget deficit B. Would have no effect on output C. Would have no effect on consumption D. None of the above

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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

"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 contractionary monetary policy

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

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

By financial crowding our economists mean

Fiscal policy is purposeful movements in _____designed to direct an economy

In economics money refers to

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

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

The implementation lag for monetary policy is generally

A sale of bonds by the central bank should cause.

An increase in expected inflation is likely ot cause.

Which school of economic thought suggested that one possible cause of inflation was a push from the cost side.

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

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

As the required reserve ratio is decreased the money multiplier.

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.

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

in The Liquidity trap region

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

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

PPSC Economics Chapter 4 Important MCQ's

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

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.