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

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

Question # 2

When your grandmother keeps her savings hidden under her mattress she is using money as.

Question # 3

A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___

Question # 4

Which of the following events will lead to a decrease in the demand for money.

Question # 5

There are ______ methods of measuring GDP

Question # 6

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

Question # 7

The budget deficit tends to decrease when

Question # 8

Time lags which often erode effectiveness of monetary and fiscal policy measures represent.

Question # 9

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 # 10

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

Question # 11

Fiscal policy refers to the manipulation of government income and expenditure to.

Question # 12

Automatic stabilizers

Question # 13

During period of inflation

Question # 14

The limit of an economy's total productive capacity at any given time is set by

Question # 15

The investment demand curve shows the relationship between the levels of.

Question # 16

In the Keynesian cross diagram, an increase in autonomous consumer function to shift _______ the equilibrium level of aggregate output to rise and the IS curve to shift to the.

Question # 17

Suppose velocity is constant and the real income elasticity of the demand for money is less than one then estimating inflation as money growth rate minus real growth rate.

Question # 18

Net taxes are.

Question # 19

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

Question # 20

As a result of the increase in government expenditures disposable income increases by.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
A. up ; right
B. up ; left
C. down ;left
D. down ; right
2 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
A. up ; right
B. up ; left
C. down ;left
D. down ; right
3 Which of the following causes M1 demand is decrease.
A. A fall in the tax rate
B. An increase in income
C. A fall in the interest rate
D. An increase in the use of credit cards
4 In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift down the equilibrium level of aggregate output to___________ and the IS curve to shift to the.
A. up ; left
B. up ; right
C. down ; left
D. down ; right
5 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
6 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
7 The government performs its redistribution function mainly through.
A. Trade practice legislation against anticipative behavior
B. The provision of public goods
C. Taxes and transfer payments
D. Tariffs on imports
8 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.
A. up ; rise
B. up ; fall
C. down ;rise
D. down ; fall
9 The largest source of tax revenue for the federal government is.
A. The personal income tax
B. The social security tax
C. The property tax
D. The sales tax
10 In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.
A. increases ; increase
B. increases ; decrease
C. decreases ; decreases
D. decreases ; increses

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