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

A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______

Question # 2

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 # 3

How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.

Question # 4

Identify the three motives of money demand.

Question # 5

According to the Laffer curve as tax rates increase tax revenues.

Question # 6

If the State bank of Pakistan wished to pursue a light monetary policy it would.

Question # 7

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 # 8

The aggregate demand curve is downward sloping because a higher price level.

Question # 9

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

Question # 10

What major advantage of monetary policy over fiscal policy does this clipping underline.

Question # 11

The opportunity cost of holding currency decrease when

Question # 12

The board pumps money out of the economy by

Question # 13

A decrease in the legal reserve ratio from 25% to 20% will

Question # 14

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

Question # 15

The opportunity cost of holding currency decreases when.

Question # 16

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 # 17

Automatic stabilizers

Question # 18

Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.

Question # 19

a contractionary monetary policy

Question # 20

"The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 An increase in the quantity of money supplied shifts the money supply curve to the_______ and the equilibrium interest rate
A. right ; falls
B. right ; rises
C. left ; falls
D. left ; rises
2 Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.
A. Panel a
B. Panel d
C. Panel b
D. Panel e
3 In the case of an expansionary ___ policy the interest rate rise while in the case of an expansionary _______ policy the interest rate falls.
A. monetary ; monetary
B. monetary ; fiscal
C. fiscal ; monetary
D. fiscal ; fiscal
4 When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.
A. Increase ; right ; fall; increase
B. increases ; left ; rise ; decrease
C. decreases ; left ;rise ; increases
D. decreases ; left ; fall ; increases
5 When your grandmother keeps her savings hidden under her mattress she is using money as.
A. a standard of deferred panyment
B. A comfortable thing for sleeping
C. A medium of exchange
D. A store of value
6 An increase in spending those results from expansionary _______ policy cause the interest rate to.
A. fiscal ; rise
B. fiscal ; fall
C. incomes ; rise
D. income ; fall
7 Increasing the government budget deficit.
A. Increases output in the long run
B. Decreases output in the short run
C. Decreases output in the long run.
D. Decreases the interest rate in the medium run.
8 A 15% VAT is a.
A. Proportional income tax
B. Fixed excise duty
C. Ad valorem indirect tax
D. None of the above
9 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.
10 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

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