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

The quantity of money demanded increases with income Thus if income increases the opportunity cost of holding money demand and re establish equilibrium in the money market This relation is captured by.

Question # 2

Which of the following would qualify as an aggregate demand shocks.

Question # 3

Why would corporations want to achieve zero balances in their checking accounts.

Question # 4

"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.

Question # 5

Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.

Question # 6

In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift _____ the equilibrium level of aggregate output to fall, and the IS curve to shift to the.

Question # 7

A business cycle refers to.

Question # 8

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

Question # 9

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

Question # 10

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.

Question # 11

If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____

Question # 12

"Transactions" money is money used as a

Question # 13

Commercial banks

Question # 14

Fiscal policy is purposeful movements in _____designed to direct an economy

Question # 15

A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______

Question # 16

Employment tends to _______ whwn aggregate output.

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

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

Question # 19

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

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.
A. Bank's line of credit
B. Reserve ratio
C. Current ratio
D. Money multipiler
2 The near term effect of an unexpected sale of bonds by the central bank is.
A. An increase in interest rates, a risen investment and a rise in GDP
B. An increase in interest rates a drop in investment and a drop in GDP
C. A decrease in interest rtes a rise in investment and a rise in GDP
D. A decrease in interesr rates a drop in investment and a drop in GDP
3 "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
4 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
5 A 15% VAT is a.
A. Proportional income tax
B. Fixed excise duty
C. Ad valorem indirect tax
D. None of the above
6 Which of the following persons would be considered unemployed.
A. a house wife
B. A person who worked more than 20 hours in a family owned business
C. A 15 years old looking for summer employment
D. A recent college graduate looking for her fist job
7 In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.
A. increases ; increase
B. increases ; decrease
C. decreases ; decreases
D. decreases ; increses
8 There are ______ methods of measuring GDP
A. Three
B. Four
C. Five
D. None
9 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500
10 "The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.
A. Tax rates
B. The money supply
C. Aggregate demand
D. Government spending

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