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

According to Marshall the basis of consumer surplus is.

Question # 2

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 # 3

During period of inflation

Question # 4

Net taxes are.

Question # 5

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.

Question # 6

How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.

Question # 7

The opportunity cost of holding currency decrease when

Question # 8

An autonomous increase in the value of the domestic exchange rate.

Question # 9

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

Question # 10

Which of the following causes M1 demand to decrease.

Question # 11

By controlling the monetary base economists mean

Question # 12

"Transactions" money is money used as a

Question # 13

The intersection of the IS and LM curves captures.

Question # 14

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 # 15

As the interest sensitivity of money demand increases

Question # 16

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

Question # 17

Commercial banks

Question # 18

Money or paper currency serves at least _______ functions.

Question # 19

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 # 20

The function of money do not include.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The automatic stabilization function of fiscial policy ensures that government expenditures _________ and government revenues __ during recessions.
A. decrease ; decrease
B. decrease ; increase
C. Increase ; decrease
D. increase ; increase
2 How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.
A. Rs.1 billion
B. Rs.2 billion
C. Rs.0.9 billion
D. Rs.0.5 billion
3 Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.
A. Panel b
B. Panel c
C. Panel a
D. Panel d
4 A change in the money supply has a greater effect upon equilibrium income.
A. The more interest sensitive private sector spending is.
B. The less interest sensitive private sector spending is.
C. The smaller the expenditure multiplier is
D. The more interest sensitive money holdings are to the rate of interest.
5 When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.
A. more ; iincreases
B. less ; increases
C. more ; decreases
D. more ; increases
6 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
7 An expansionary monetary policy
A. Reduces interest rates
B. Increases real output
C. Shifts the LM curve to the right
D. All of the above
8 What happens to the money supply if the deficit is financed by selling bonds to the central bank.
A. The money supply increases
B. The money supply decreases
C. The money supply is unaffected
D. We cannot tell what will happen to the money supply
9 The board pumps money out of the economy by
A. Buying bonds
B. Selling bond
C. Creating cash
D. Lowering the reserve requirements.
10 A decrease in autonomous consumer expenditure causes the equilibrium level of 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

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