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

An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise

Question # 2

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 # 3

The negative effect on the economy that occurs when average tax rates increases because taxpayers have moved into higher income brackets during an expansion is.

Question # 4

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

Question # 5

The ratio of debt to GDP will be larger

Question # 6

Those who favor setting the target rate of inflation at about 3% believe.

Question # 7

A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.

Question # 8

If the demand for money increase relative to the supply of money

Question # 9

The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.

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

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

Question # 12

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 # 13

What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

Question # 14

Net taxes are.

Question # 15

According to classical models, the level of employment is determined primarily by

Question # 16

Employment tends to _______ whwn aggregate output.

Question # 17

The use of money is more efficient than barter because the introduction of money

Question # 18

By controlling the monetary base economists mean

Question # 19

Believers in the monetarist rule assert that

Question # 20

A sale of bonds by the central bank should cause.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 "Far better for central bankers to get out of the fine tuning business instead they should d try to keep.
A. Taxes low
B. Budgets balanced
C. Money growth low
D. Government spending in check
2 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
3 How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.
A. Rs.3.5 billion
B. Rs.1.5 billion
C. Rs. 4.9 billion
D. Rs.2.8 billion
4 If a perfectly competitive industry is in long run equilibrium all firms will
A. Have a marginal costs
B. Have identical supply curves
C. Operate at the point where marginal cost just covers all variable costs
D. Have equal fixed costs
5 The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.
A. Velocity of money
B. Nominal output
C. Overall price level
D. Stock of money
6 A checking deposit held at a commercial bank is considered ______ of that bank.
A. An asset
B. Net worth
C. a liability
D. Capital
7 Knowledge of the money supply can lead to good predications of nominal GDP only
A. If the price level is stable
B. If the money supply is stable
C. Over very short periods of time
D. If the determinants of velocity are known
8 The budget deficit tends to decrease when
A. GDP increases
B. GDP decreases rapidly
C. GDP remains unchanged
D. GDP decreases slightly
9 Factors that cause the IS curve to shift include.
A. Changes in autonomous consumer spending
B. Changes in government spending
C. Changes in investment spending related to business confidence
D. All of the above
10 "Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.
A. The multiplier
B. The money multiplier
C. Required reserve ratio
D. Open market operations

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