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

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 # 2

A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate

Question # 3

Money is

Question # 4

A major advantage of monetary over fiscal policy is that monetary policy

Question # 5

A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the

Question # 6

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

Question # 7

The ratio of debt to GDP will be larger

Question # 8

An increase in expected inflation is likely ot cause.

Question # 9

The limit of an economy's total productive capacity at any given time is set by

Question # 10

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 # 11

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

Question # 12

Which of the following part of M1

Question # 13

Why do people keep currency in their pockets when bank deposits pay interest.

Question # 14

There are ______ methods of measuring GDP

Question # 15

When considering any kind of economics indicator, prices are important because.

Question # 16

In the Keynesian cross diagram a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to ______

Question # 17

The quantity of money demanded varies.

Question # 18

The largest source of tax revenue for the federal government is.

Question # 19

A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The implementation lag for monetary policy is generally
A. Much longer than it is for fiscal policy
B. Unrelated to central bank action
C. The same as it is for fiscal policy
D. Much shorter than it is for fiscal policy.
2 Monetary policy can affect output.
A. this statement is always true
B. This statements always false
C. This statement is true only in the short run
D. This statement is true only in the medium run and the long run
3 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
4 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
5 The use of money is more efficient than barter because the introduction of money
A. Reduces the need for economic specialization
B. Reduces the need to exchange goods
C. Reduce the need for other stores of value
D. Reduces transaction costs
6 An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.
A. rise ; rise
B. rise ; fall
C. fall ; rise
D. fall ; fall
7 The economic logic behind granting central bank's independence from governmental the conduct of monetary policy is.
A. To eliminate seignior age
B. To allow open market operations
C. To enhance the credibility of monetary policy.
D. None of the above
8 " A growing number of economists view the Fed's new willingness to take on more of the nation's debt as inflationary in the long run." This inflation worry is because.
A. The government may tax less
B. The debt may become excessive
C. The government may spend more
D. The money supply may increase excessively
9 By controlling the monetary base economists mean
A. Controlling the money multiplier
B. Restricting the amount of cash in circulation
C. Not allowing commercial banks to issue notes and coins
D. making banks keep a certain % of their assets as M0
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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