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

00:00
Question # 1

In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to

Question # 2

Increasing the government budget deficit.

Question # 3

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

Question # 4

The budget deficit tends to decrease when

Question # 5

Which of the following would qualify as an aggregate supply shock.

Question # 6

During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____

Question # 7

Given fixed exchange rates assume Pakistan initiates contractionary monetary ad fiscal policies to combat inflation. these policies will also.

Question # 8

A major advantage of monetary over fiscal policy is that monetary policty.

Question # 9

Money's primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization This function of money is called.

Question # 10

"Rising productivity does not in itself spell the end of inflation. With enough______ it would still be possible to whip prices into a froth the blank is best filled with.

Question # 11

The quantity of money demanded varies.

Question # 12

The equilibrium level of saving is.

Question # 13

In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.

Question # 14

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

Question # 15

"Transactions" money is money used as a

Question # 16

A state of government bonds by the central bank should cause

Question # 17

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

Question # 18

"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.

Question # 19

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 # 20

How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 An autonomous increase in the value of the domestic exchange rate.
A. Increases output net exports and the interest rate.
B. Decreases output net exports and the interest rate
C. Decreases output and net exports and increases the interest rate.
D. Increase output and decreases net exports and the interest rate.
2 What major advantage of monetary policy over fiscal policy does this clipping underline.
A. Monetary policy is more effective
B. Monetary policy is lss discriminatory
C. Monetary policy can influence interest rates
D. Monetary policy can be undertaken more quickly
3 A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the
A. decreases ; right
B. decrease ; left
C. increase ; right
D. increases ; left
4 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
5 A checking deposit held at a commercial bank is considered ______ of that bank.
A. An asset
B. Net worth
C. a liability
D. Capital
6 If the nominal money supply doubles while real money demand is unchanged what happens to the price level.
A. The price level increases by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
7 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.
A. Overestimates inflation
B. Underestimates inflation
C. Is an erratic estimate of inflation
D. Remain an accurate estimate of inflation.
8 "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
9 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.
A. rise ; left
B. rise ; right
C. fall ; left
D. fall ; right
10 Which of the following events will lead to a decrease in the demand for money.
A. An increase in the level of aggregate output.
B. A decrease in the supply of money
C. A decrease in the interest rate
D. a decrease in the price level

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