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

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

Question # 2

You move some of your savings account balance into your checking account.

Question # 3

An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise

Question # 4

A decline in taxes __ consumer expenditure and shifts the _ curve shifts to the.

Question # 5

"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 # 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.

Question # 7

If the demand for money increase relative to the supply of money

Question # 8

Under a fixed exchange rate system an expansionary fiscal policy leads to a

Question # 9

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

Question # 10

Money and income are.

Question # 11

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

Question # 12

What's the most common way for a central bank to reduce the money supply.

Question # 13

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

Question # 14

Under system fixed exchange rates which of the following policies promotes internal balance for a nation.

Question # 15

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

Question # 16

When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.

Question # 17

Time lags which often erode effectiveness of monetary and fiscal policy measures represent.

Question # 18

If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from.

Question # 19

Fiscal policy refers to.

Question # 20

Which of the following measures is the best measure of money as a medium of exchange.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 During period of inflation
A. Those people who have fixed incomes benefit
B. Every one's real income falls
C. those people who enter long term wage agreements benefit
D. Those people whose real income rises faster than the general price level benefit
2 An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the
A. rise ; LM ;right
B. rise ; IS ; right
C. fall ; LM, Left
D. rise ; IS ; Left
3 The main role of the Federal Reserve is to
A. Administer the government on the state of the economy
B. Overses the operations of the financial system and monetary management.
C. Establish the value of the dollar and official interest rates
D. Provide advice to the government on the state of the economy.
4 The parable of Riding a Switchback suggests that stabilizing policy.
A. Is not sufficiently stimulating or contra citing the economy at any time
B. Is desirable
C. Is effective
D. Is stimulating or contracting the economy at the wrong times.
5 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.
6 If the central Bank wished to Tighten money is would.
A. Lower the discount rate
B. Sell government securities
C. Lower the legal reserve ratio
D. Lower the tax rate
7 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
8 During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____
A. LM ; rightward
B. IS ; rightwards
C. LM ; Leftward
D. IS ; Leftward
9 Factors that cause the IS curve to shift include.
A. Changes in autonomous consumer spending
B. Changes in government spending
C. Changes in investment spending related to business confidence
D. All of the above
10 In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to
A. Increase ; increase
B. Increase ; decrease
C. decrees ; decrease
D. decrease ;Increase

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