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

An item designed as money that is intrinsically worthless could the.

Question # 2

An increase in oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____

Question # 3

The economic logic behind granting central bank's independence from governmental the conduct of monetary policy is.

Question # 4

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

Question # 5

An example of nondiscretionary fiscal policy would be.

Question # 6

In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.

Question # 7

in The Liquidity trap region

Question # 8

What is the significance of underestimating transactions money.

Question # 9

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

Question # 10

"Transactions" money is money used as a

Question # 11

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 # 12

If the Central Bank wanted to decrease the quantity of money held by the public it would.

Question # 13

An example of discretionary fiscal policy would be.

Question # 14

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

Question # 15

The money multiple tells us teh ultimate increase in.

Question # 16

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

Question # 17

An increase in spending those results from expansionary _______ policy cause the interest rate to.

Question # 18

When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.

Question # 19

The budget deficit tends to decrease when

Question # 20

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.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 a contractionary monetary policy
A. Reduces interest rtes
B. Reduces real output
C. shifts the LM curve to the right
D. All of the above
2 Money or paper currency serves at least _______ functions.
A. Three
B. Four
C. Five
D. Seven
3 An increases in the quantity of money supplied shifts the money supply curve to the _____and the LM curve to the
A. right ; left
B. right ; right
C. left ; left
D. left ; right
4 Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.
A. Money demand declines first then rises when inflation increases
B. Money demand rises
C. The overall effect is ambiguous
D. Money demand declines
5 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.
A. 40 percent and Rs. 4,000,000
B. 40 percent and Rs. 10,000,000
C. 25 percent and Rs. 2.500,000
D. 25 percent and Rs.10,000,000
6 According to Marshall the basis of consumer surplus is.
A. Law of diminishing marginal utility.
B. Law of equal marginal utility
C. Law of proportions
D. All of the above
7 If the State bank of Pakistan wished to pursue a light monetary policy it would.
A. Lower the required reserve ratio and the statutory liquidity ratio.
B. Lower interest rates
C. Buy government securities on the open market
D. Sell government securities on the open market
8 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.
9 If the original money supply is MSo and the original demand for money is MDo then
A. The equilibrium interest rate and savings are 5% and 50
B. The money supply is 200 and equilibrium income is 500
C. The equilibrium interest rate and income are 5% and 600
D. The speculative demand is 25
10 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

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