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

A decrease in the legal reserve ratio from 25% to 20% will

Question # 2

"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 # 3

A change in the money supply has a greater effect upon equilibrium income.

Question # 4

A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

Question # 5

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 # 6

According to the Laffer curve as tax rates increase tax revenues.

Question # 7

A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.

Question # 8

Large difference is inflation rates among countries are almost always the result of large difference in.

Question # 9

A Political problem with discretionary fiscal policy is the.

Question # 10

A good that is used as a medium of exchange as well as being a consumption good is called.

Question # 11

"Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.

Question # 12

The main source of interest profits for banks is.

Question # 13

An increase in money demand other thing equal shifts the ____ curve to the___

Question # 14

A monetary action consistent with the central bank selling bonds in the open market would be.

Question # 15

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

Question # 16

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

Question # 17

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

Question # 18

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 # 19

A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______

Question # 20

"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 There are _______ major instrument of monetary policy.
A. Three
B. Four
C. Five
D. None
2 A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.
A. Increases ; increases ; right
B. Increases ; decreases ; left
C. decreases ; increases ; left
D. decreases ; decreases ; right
3 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
4 According to Marshall the basis of consumer surplus is.
A. Law of diminishing marginal utility.
B. Law of equal marginal utility
C. Law of proportions
D. All of the above
5 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.
6 Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if
A. The IS curve shifts left ward
B. The IS curve shifts right ward
C. The money supply increase
D. Taxes are cut
7 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
8 If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____
A. decreases ; right
B. decreases ; left
C. Increases ; right
D. Increase ; left
9 A decline in the value of the rupee makes Pakistan goods cheaper relative to foreign goods, resulting in a _________ in net exports and a ________shifts of the IS curve.
A. fall ; leftward
B. rise ; leftward
C. fall ; rightward
D. rise ; rightward
10 Which of the following would qualify as an aggregate supply shock.
A. An unexpected increase in oil prices
B. Seasonally expected increase in oil prices
C. An unexpected reduction in consumer confidence
D. an anticipated tax cut

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