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

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 # 2

in The Liquidity trap region

Question # 3

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

Question # 4

Suppose velocity is constant and the real income elasticity of the demand for money is less than one then estimating inflation as money growth rate minus real growth rate.

Question # 5

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

Question # 6

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

Question # 7

Which of the following causes M1 demand is decrease.

Question # 8

The money multiple tells us teh ultimate increase in.

Question # 9

If the central bank prints more 10 billion and spends them then as a direct result of this action.

Question # 10

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

Question # 11

If firms paying employees monthly began paying them weakly then the demand for money would.

Question # 12

Automatic stabilizers

Question # 13

The economic logic behind granting central bank's independence from governmental the conduct of monetary policy is.

Question # 14

As the interest sensitivity of money demand increases

Question # 15

The board pumps money out of the economy by

Question # 16

A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___

Question # 17

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 # 18

The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.

Question # 19

The aggregate demand curve is downward sloping because a higher price level.

Question # 20

An increase in government spending causes the equilibrium level of aggregate output to_______ at any given interest rate and shifts the ____ curve to the

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Tax incidence is the
A. Ultimate distribution of a tax's burden
B. Measure of the inpat the tax has on employment and output
C.
Behavior of shifting the tax to another party
D. Structure of the tax
2 An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the.
A. Revenue from value added tax
B. Level of company profits
C. Level of unemployment
D. Average level of wages
3 An increase in the money supply other thighs equal shifts the ______ curve to the
A. IS ; right
B. Is ; left
C. LM ; Left
D. LM ; right
4 A decrease in fully autonomous investment other things equal shifts the ______ curve to the
A. IS ; right
B. IS ; Left
C. LM ; Left
D. LM ; right
5 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
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 If the Bank of Pakistan wished to pursue a tight monetary policy is would.
A. Sell government securities on the open market.
B. Reduce the minimum reserve asset ratio
C. Buy government securities on the open market.
D. Lower interest rates
8 The aggregate demand curve is downward sloping because a higher price level.
A. Makes people wealthier and so they spend more
B. Causes higher wages and so people spend more
C. Cuts the real value of income and so people spend less
D. Decreases the real supply of money decreasing spending.
9 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
10 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

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