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

What happens to the money supply if the deficit is financed by selling bonds to the central bank.

Question # 2

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

Question # 3

"Although he didn't say so, this may ultimately compet the central bank to resort increasingly to managing the money supply by managing banks excess cash reserves the stuff from which the banks create loans". How would the central bank manages these excess reserves.

Question # 4

Short run contractionary Fiscal policy would result in.

Question # 5

Automatic stabilizers

Question # 6

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

Question # 7

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

Question # 8

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

Question # 9

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the _______ curve to the __________

Question # 10

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

Question # 11

How do the banks gain from this corporate behavior.

Question # 12

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 # 13

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 # 14

"Far better for central bankers to get out of the fine tuning business instead they should d try to keep.

Question # 15

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

Question # 16

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

Question # 17

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

Question # 18

A change in the money supply has a greater effect upon equilibrium income.

Question # 19

A shift in tastes toward Pakistan goods ________ net exports and causes the IS curve to shift to the.

Question # 20

Believers in the monetarist rule assert that

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 " A growing number of economists view the Fed's new willingness to take on more of the nation's debt as inflationary in the long run." This inflation worry is because.
A. The government may tax less
B. The debt may become excessive
C. The government may spend more
D. The money supply may increase excessively
2 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
3 The situation in which the imports are greater than exports is termed as.
A. Trade surplus
B. Trade deficit
C. Budget surplus
D. None
4 Fiscal policy refers to.
A. The actions of the central bank in controlling the money supply
B. The government's altitude to taxation
C. The spending and taxing policies used by the government to influence the economy
D. The governments regulation of financial intermediaries.
5 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
6 The investment demand curve shows the relationship between the levels of.
A. Investment and consumption
B. Consumption and Interest rate
C. Investment and interest rate
D. None
7 Given fixed exchange rates assume Pakistan initiates contractionary monetary ad fiscal policies to combat inflation. these policies will also.
A. Reduce a balance of payments surplus
B. Reduce a balance of payments deficit
C. Increases both imports and exports
D. Decrease both imports and exports
8 If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.
A. Purchases ; decreases
B. sales ; increases
C. purchases ; increases
D. sales ; decreases
9 An increase in oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____
A. A movement along the AS curve cost push inflation
B. A leftward shift int he AS curve demand pull inflation.
C. A right ward shift in the AS Curve cost push inflation
D. a left ward shift in the AS curve cost push inflation
10 The rate of which central bank lends to commercial banks is known as
A. reserve rate
B. Discount rate
C. Open market operation
D. None

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