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

"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.

Question # 2

If the Bank of Pakistan wished to pursue an expansionary monetary policy it would.

Question # 3

The board pumps money out of the economy by

Question # 4

A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.

Question # 5

If the Bank of Pakistan wished to pursue a tight monetary policy is would.

Question # 6

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.

Question # 7

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 # 8

Which of the following would qualify as an aggregate demand shocks.

Question # 9

In the ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.

Question # 10

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

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

Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.

Question # 13

Automatic stabilizers

Question # 14

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

Question # 15

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

Question # 16

The purpose of financial intermediaries is.

Question # 17

The IMF is an agency charged with providing.

Question # 18

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

Question # 19

Suppose velocity is constant and the real income elasticity of the demand for money is less than one then estimating inflation as money growth rate minus real growth rate.

Question # 20

When there is no change in central banking holding of international reserve balances a country's

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 As the interest sensitivity of investment spending increase.
A. Monetary policy has a larger effect on output
B. Fiscal policy has a larger effect on output
C. The multiplier increases
D. All of the above
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.
A. store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment
3 Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.
A. Left ward ; LM
B. Right ; LM
C. Left ward ; IS
D. Left ward ; AD
4 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
5 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.
6 There are _______ major instrument of monetary policy.
A. Three
B. Four
C. Five
D. None
7 A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.
A. fall ;LM; right
B. fall ;IS; Left
C. fall ;LM; Left
D. rise ;LM; Rifht
8 A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.
A. Reduce
B. Increase
C. Have no effect on
D. Double
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 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

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