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

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 # 2

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

Question # 3

If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.

Question # 4

A decrease iin money demand other thing equal shifts the _____ curve to the

Question # 5

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

Question # 6

The real money demand doubles while the nominal money supply is unchanged what happens to the price level.

Question # 7

"The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.

Question # 8

The IS curve shifts to the left when

Question # 9

The rate of which central bank lends to commercial banks is known as

Question # 10

An expansionary monetary policy

Question # 11

Which of the following causes M1 demand is decrease.

Question # 12

Which policies are expenditure changing policies.

Question # 13

An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the

Question # 14

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 # 15

Which of the following would qualify as an aggregate supply shock.

Question # 16

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 # 17

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

Question # 18

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

Question # 19

The ratio of debt to GDP will be larger

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate
A. Rises ; rises
B. rises ; falls
C. falls ; rises
D. falls ; falls
2 The quantity of money demanded varies.
A. Directly with both prices and output
B. Inversely with both prices and output
C. Directly with prices and inversely with output
D. Inversely with prices and directly with output
3 An autonomous rise in the value of the Rupee makes Pakistan goods _____ expensive relative to foresight goods which ______ net exports
A. Less ; decreases
B. Less ; increases
C. More ; decreases
D. more ; increases
4 An example of nondiscretionary fiscal policy would be.
A. The operation of the welfare state
B. A Federal jobs program adopted to stimulate consumption
C. A tax cut adopted to stimulate consumption
D. An interest rate cut implemented to stimulate consumption
5 A decrease iin money demand other thing equal shifts the _____ curve to the
A. IS ; right
B. Is ; Left
C. LM ; Left
D. LM ; Rfight
6 An item designed as money that is intrinsically worthless could the.
A. A currency note
B. A silver coin
C. A barter item
D. Any tradeable commodity
7 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.
A. rise ; rise
B. rise; fall
C. fall ; rise
D. fall ; fall
8 Why do people keep currency in their pockets when bank deposits pay interest.
A. Because banks might steal your money
B. Because currency is more liquid
C. Because bank deposits lose value due to inflation
D. Because bank deposits lose value due to exchange in interest rates.
9 A decrease 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
10 You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.
A. If you live in a 1st best world.
B. If you live in a 2nd best world
C. If the tax rates on some of the items are prohibitively high
D. Either of the above

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