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

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

Question # 2

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

Question # 3

The market price of bonds can fluctuate depending on

Question # 4

Which of the following causes M1 demand is decrease.

Question # 5

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

Question # 6

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.

Question # 7

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

Question # 8

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

Question # 9

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

Question # 10

There are ______ methods of measuring GDP

Question # 11

If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.

Question # 12

Which of the following would qualify as an aggregate demand shocks.

Question # 13

The budget deficit tends to decrease when

Question # 14

If the Central Bank wanted to decrease the quantity of money held by the public it would.

Question # 15

The rate of which central bank lends to commercial banks is known as

Question # 16

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

Question # 17

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

Question # 18

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

Question # 19

The function of money do not include.

Question # 20

What happens to the money supply if the deficit is financed by selling bonds to the general public.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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.
2 A state of government bonds by the central bank should cause
A. Bond prices to rise
B. an increase in the supply of money
C. An increase in chartered banks loans
D. A decrease in reserves of the banking system.
3 "The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.
A. Tax rates
B. The money supply
C. Aggregate demand
D. Government spending
4 The rate of which central bank lends to commercial banks is known as
A. reserve rate
B. Discount rate
C. Open market operation
D. None
5 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
6 Which of the followig does not shift the IS curve .
A. An increases in autonomous consumption
B. An increase in government spending.
C. A decline in government spending
D. A fall in theinterest rate
7 An increase in money demand other thing equal shifts the ____ curve to the___
A. IS ; right
B. IS ; Left
C. LM ; Left
D. LM ; right
8 The near term effect of an unexpected sale of bonds by the central bank is.
A. An increase in interest rates, a risen investment and a rise in GDP
B. An increase in interest rates a drop in investment and a drop in GDP
C. A decrease in interest rtes a rise in investment and a rise in GDP
D. A decrease in interesr rates a drop in investment and a drop in GDP
9 a contractionary monetary policy
A. Reduces interest rtes
B. Reduces real output
C. shifts the LM curve to the right
D. All of the above
10 A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate
A. Rises ; rises
B. rises ; falls
C. falls ; rises
D. falls ; falls

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