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

Believers in the monetarist rule assert that

Question # 2

The purpose of financial intermediaries is.

Question # 3

Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.

Question # 4

The opportunity cost of holding currency decrease when

Question # 5

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 __________

Question # 6

Knowledge of the money supply can lead to good predications of nominal GDP only

Question # 7

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 __________

Question # 8

Automatic stabilizers

Question # 9

If the central Bank wished to Tighten money is would.

Question # 10

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

Question # 11

A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______

Question # 12

"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 # 13

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 # 14

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

Question # 15

An example of nondiscretionary fiscal policy would be.

Question # 16

An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.

Question # 17

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

Question # 18

The opportunity cost of holding currency decreases when.

Question # 19

Why would corporations want to achieve zero balances in their checking accounts.

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The central bank and the government are working against each other if as the government cuts taxes the central bank
A. Sells government bonds
B. Lowers the discount rate
C. Increase the money supply
D. Decrease the legal reserve requirements
2 You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.
A. If you live in a 1st best world.
B. If you live in a 2nd best world
C. If the tax rates on some of the items are prohibitively high
D. Either of the above
3 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
4 The real money demand doubles while the nominal money supply is unchanged what happens to the price level.
A. The price level increase by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
5 The function of money do not include.
A. an exchange of purchasing power
B. A unit of account
C. A medium of exchange
D. A store of value
6 Identify the three motives of money demand.
A. Accumulative
B. Speculative precautionary
C. Speculative transaction precautionary
D. Precautionary special trisection
7 A monetary expansion is characterized by
A. Rising output and interest rates
B. Rising output and falling interest rates.
C. Constant output and falling interest rates
D. Falling output and interest rates
8 When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.
A. 0.25
B. 4
C. 0.4
D. Rs.4 billion
9 The ____ lag for fiscal policy is generally _____ than it is for monetary policy.
A. Recognition ; shorter
B. Recognition ; longer
C. Implementation ; shorter
D. Implementation ; longer
10 A Political problem with discretionary fiscal policy is the.
A. Contractionary bias
B. Big state bias
C. Expansionary bias
D. Over reaction bias

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