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

Why do people keep currency in their pockets when bank deposits pay interest.

Question # 2

Short run contractionary Fiscal policy would result in.

Question # 3

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.

Question # 4

The government performs its redistribution function mainly through.

Question # 5

Money or paper currency serves at least _______ functions.

Question # 6

Tax incidence is the

Question # 7

If there is a financial panic and increased uncertainty about the return in the stock market and bond market what is the likely effect on money demand.

Question # 8

If the Central Bank wanted to decrease the quantity of money held by the public it would.

Question # 9

An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _______ relative to foreign goods and results in a ______ in net exports.

Question # 10

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

Question # 11

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.

Question # 12

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

Question # 13

"The earlier predictions underestimated currency in circulation and treasury balances at the Fed, both of which drained reserves from the banking system" Lower reserves means.

Question # 14

Net taxes are.

Question # 15

In an economy experience high interest rates and high unemployment The ISLM frame work predicts that _________ policy has been too.

Question # 16

When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.

Question # 17

Knowledge of the money supply can lead to good predications of nominal GDP only

Question # 18

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

Question # 19

"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 # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The main source of interest profits for banks is.
A. Checking account fees
B. Loans
C. Government securities
D. Savigng accounts
2 Following the work of _____________ in the 1960s, and the controversy associated with these views in the 1970s, there was a revival of interest by economists and government in monetary policy.
A. Milton Friedman
B. Ronald Reagan
C. Margaret Thatcher
D. John Maynard Keynes
3 "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
4 An increases in the value of the Rupee makes foreign goods cheaper relative to Pakistan goods, resulting in a _______ in net exports and a __ shift of the IS curve
A. fall ; leftward
B. rise ; leftward
C. fall ; rightward
D. rise ; rightward
5 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.
A. up ; left
B. up ; right
C. down ; left
D. down ; right
6 Time lags which often erode effectiveness of monetary and fiscal policy measures represent.
A. The change in export and import price.
B. Delays in the response of the economy to stabilization policy.
C. The foreign response to price changes
D. The change in exchang erates
7 Why do people keep currency in their pockets when bank deposits pay interest.
A. Because banks might steal your money
B. Because currency is more liquid
C. Because bank deposits lose value due to inflation
D. Because bank deposits lose value due to exchange in interest rates.
8 The real money demand doubles while the nominal money supply is unchanged what happens to the price level.
A. The price level increase by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
9 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
10 There are _______ major instrument of monetary policy.
A. Three
B. Four
C. Five
D. None

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