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

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

Question # 2

An increase in government spending causes the equilibrium level of aggregate output to_______ at any given interest rate and shifts the ____ curve to the

Question # 3

The implementation lag for monetary policy is generally

Question # 4

The function of money do not include.

Question # 5

In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift down the equilibrium level of aggregate output to___________ and the IS curve to shift to the.

Question # 6

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

Question # 7

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

Question # 8

The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.

Question # 9

Credit constitutes.

Question # 10

During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____

Question # 11

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 # 12

The purpose of fiscal policy is to

Question # 13

A state of government bonds by the central bank should cause

Question # 14

During period of inflation

Question # 15

The main role of the Federal Reserve is to

Question # 16

According to the supply side model a reduction in the tax rate.

Question # 17

If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from.

Question # 18

In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to.

Question # 19

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

Question # 20

Factor that cause the IS curve to shift include.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
2 What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.
A. The multiplier
B. The money multiplier
C. Required reserve ratio
D. Open market operations
3 The main role of the Federal Reserve is to
A. Administer the government on the state of the economy
B. Overses the operations of the financial system and monetary management.
C. Establish the value of the dollar and official interest rates
D. Provide advice to the government on the state of the economy.
4 " 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
5 An increase in autonomous consumer expenditure causes the equilibrium levelof 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
6 When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.
A. Is unchaged
B. Increase by Rs.100,000
C. Increases by Rs. 1,000,000
D. None of these
7 A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate
A. right ; fall
B. right ; rises
C. left ; falls
D. left ; rises
8 in The Liquidity trap region
A. Fiscal policy is not effective
B. Monetary policy is completely ineffective
C. Monetary policy is completely effective
D. Fiscal policy and monetary policy are equally effective
9 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
10 A checking deposit held at a commercial bank is considered ______ of that bank.
A. An asset
B. Net worth
C. a liability
D. Capital

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