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

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

Question # 2

An expansionary monetary policy

Question # 3

in the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift _____the equilibrium level of aggregate output to ______l and the IS curve Curve to shift to the.

Question # 4

When a government prints money to finance its expenditures it is likely to cause

Question # 5

The quantity of money demanded varies.

Question # 6

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

Question # 7

How do the banks gain from this corporate behavior.

Question # 8

If the State bank of Pakistan wished to pursue a light monetary policy it would.

Question # 9

A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate

Question # 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

Question # 11

The main role of the Federal Reserve is to

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

If the original money supply is MSo and the original demand for money is MDo then

Question # 14

"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.

Question # 15

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

Question # 16

An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _______ relative to foreign goods and results in a ______ in net exports.

Question # 17

In an economy experience high interest rates and high unemployment The ISLM frame work predicts that _________ policy has been too.

Question # 18

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

Question # 19

If firms paying employees monthly began paying them weakly then the demand for money would.

Question # 20

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.
A. rise ; rise
B. rise ; fall
C. fall ; rise
D. fall ; fall
2 Which of the following is not an important variable in growth accounting calculations.
A. Productivity growth
B. Money supply growth
C. Labor growth
D. Capital growth
3 According to the Laffer curve as tax rates increase tax revenues.
A. Decrease continuously.
B. Initially decrease and then increase
C. Rise continuously
D. Initially increase and then decrease
4 What's the most common way for a central bank to reduce the money supply.
A. Collect higher taxes
B. Sell bonds to the public
C. Buy bounds from the government
D. Buy bonds from the public
5 A Political problem with discretionary fiscal policy is the.
A. Contractionary bias
B. Big state bias
C. Expansionary bias
D. Over reaction bias
6 When a government prints money to finance its expenditures it is likely to cause
A. Unemployment
B. Inflation
C. Deflation
D. Reductions in the use of barter
7 Weighted monetary aggregates
A. Ignore the fact that some assets are more money like than others.
B. Are constructed by simply adding up the outstanding amounts of various types of asssets
C. Give greater weight to currency than to savings deposits
D. Value coins more than currency.
8 In the Keynesian corss diagra, an increase in autonomous consumer expenditure causes the aggregate demand function to shift up the equilibrium level of aggregate output to _______ and the IS curve to shift to the _______
A. rise ; left
B. rise ; right
C. fall ; left
D. fall ; right
9 An increase in money demand other thing equal shifts the ____ curve to the___
A. IS ; right
B. IS ; Left
C. LM ; Left
D. LM ; right
10 A change in the money supply has a greater effect upon equilibrium income.
A. The more interest sensitive private sector spending is.
B. The less interest sensitive private sector spending is.
C. The smaller the expenditure multiplier is
D. The more interest sensitive money holdings are to the rate of interest.

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