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

The function of money do not include.

Question # 2

Identify the three motives of money demand.

Question # 3

As the interest sensitivity of investment spending increase.

Question # 4

Employment tends to _______ whwn aggregate output.

Question # 5

Intermediate goods are meant for

Question # 6

The use of money is more efficient than barter because the introduction of money

Question # 7

an asset that can easily be exchanged for goods and services is called a.

Question # 8

The near term effect of an unexpected sale of bonds by the central bank is.

Question # 9

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 # 10

In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.

Question # 11

Automatic stabilizers

Question # 12

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

Question # 13

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

Question # 14

A sale of bonds by the central bank should cause.

Question # 15

A Political problem with discretionary fiscal policy is the.

Question # 16

An example of discretionary fiscal policy would be.

Question # 17

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

Question # 18

During period of inflation

Question # 19

Those who favor setting the target rate of inflation at about 3% believe.

Question # 20

By controlling the monetary base economists mean

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.
A. Purchases ; decreases
B. sales ; decreases
C. purchases ; increases
D. sales ; increases
2 Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.
A. Positively ; positively
B. Positively ; negatively
C. negatively ; positively
D. negatively ; negatively
3 The opportunity cost of holding currency decreases when.
A. Income decreases
B. The interest rate on bonds decrease
C. Buying newly issued government bonds directly from the central bank
D. Buying newly issued government bonds directly to the central bank.
4 The quantity of money demanded varies
A. Directly with both prices and output
B. Inversely with both prices and output
C. Directly with prices and inversely with output
D. Inversely with prices and directly with output
5 One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.
A. store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment
6 In the ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.
A. IS ;right
B. IS ;Left
C. LM ; Left
D. LM ; Right
7 "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.
A. Upward
B. Down ward
C. To be zero
D. To match inflation
8 In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.
A. up ; rise
B. up ; fall
C. down ; rise
D. down ; fall
9 Factor that cause the IS curve to shift include.
A. Change in autocoups consumer spending
B. Change in taxes
C. Change in government spending
D. All of the above
10 Commercial banks
A. Are financial intermediaries that offer demand deposits.
B. Are owned by the Federal Reserve
C. Are non profit banking institutions
D. Are overseen by the Federal savings and loan insurance corporation.

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