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

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

Question # 2

A decrease iin money demand other thing equal shifts the _____ curve to the

Question # 3

"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 # 4

Which of the following causes M1 demand is decrease.

Question # 5

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

Question # 6

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

Question # 7

In economics money refers to

Question # 8

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 # 9

An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _______ relative to foreign goods and results in a ______ in net exports.

Question # 10

using money as a medium of exchange.

Question # 11

Net taxes are.

Question # 12

The situation in which the imports are greater than exports is termed as.

Question # 13

A decrease iin money demand other thing equal shifts the _____ curve to the

Question # 14

The ratio of debt to GDP will be larger

Question # 15

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

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 expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.

Question # 18

If there is a financial panic and increased uncertainty about the return in the stock market and bond market what is the likely effect on money demand.

Question # 19

Which school of economic thought suggested that one possible cause of inflation was a push from the cost side.

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
2 The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.
A. 40 percent and Rs. 4,000,000
B. 40 percent and Rs. 10,000,000
C. 25 percent and Rs. 2.500,000
D. 25 percent and Rs.10,000,000
3 An increase in government spending 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 ; LM ;Left
C. fall ; IS ; Left
D. rise ; IS ;right
4 Which of the following causes M1 demand to decrease.
A. A fall in the tax rate
B. An increase in income
C. A fall in the interest rate
D. An increase in the use of credit cards
5 Total utility of a commodity is measured by which price of that commodity.
A. Value in use.
B. Value in exchange
C. Both of above
D. None of above
6 The equilibrium level of saving is.
A. Rs.120
B. Rs.75
C. Rs.40
D. Rs.80
7 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
8 A business cycle refers to.
A. Fluctuations in the general price level
B. changes in the long term growth pattern of the CPI
C. The ups and downs of real GDP
D. Fluctuations in the level of corporate.
9 "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
10 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

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