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

Try The 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

"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 # 2

"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 # 3

Under system fixed exchange rates which of the following policies promotes internal balance for a nation.

Question # 4

The central bank and the government are working against each other if as the government cuts taxes the central bank

Question # 5

Factor that cause the IS curve to shift include.

Question # 6

A checking deposit held at a commercial bank is considered ______ of that bank.

Question # 7

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

Question # 8

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

Question # 9

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

Question # 10

Which of the following would qualify as an aggregate demand shocks.

Question # 11

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

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

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

Question # 14

An example of nondiscretionary fiscal policy would be.

Question # 15

Which of the following part of M1

Question # 16

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

Question # 17

A tax increase __________ disposable income ____ consumption expenditure and shifts the IS curve to the.

Question # 18

What's the most common way for a central bank to reduce the money supply.

Question # 19

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.

Question # 20

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 _______

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The near term effect of an unexpected sale of bonds by the central bank is.
A. An increase in interest rates, a risen investment and a rise in GDP
B. An increase in interest rates a drop in investment and a drop in GDP
C. A decrease in interest rtes a rise in investment and a rise in GDP
D. A decrease in interesr rates a drop in investment and a drop in GDP
2 Believers in the monetarist rule assert that
A. Lags are long and variable
B. the economy cna be stabilized by automatic mechanisms
C. The central bank should keep the money supply growth constant
D. All of the above
3 The purpose of financial intermediaries is.
A. To allow more saving than investment
B. To discourage consumption spending
C. To collect income taxes for the government
D. To serve are middlemen between savers and borrowers.
4 Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.
A. Low ; smaller ; high
B. Low ; larger ; high
C. low ; smaller ; middle
D. High ; larger ; low
5 "Rising productivity does not in itself spell the end of inflation. With enough______ it would still be possible to whip prices into a froth the blank is best filled with.
A. Income growth
B. Unemployment
C. Money growth
D. Taxes
6 How do the banks gain from this corporate behavior.
A. More loans can be made
B. Tax free profits can be made
C. Interest rates can be increased
D. By circumvent banking regulations
7 In the case of an expansionary ___ policy the interest rate rise while in the case of an expansionary _______ policy the interest rate falls.
A. monetary ; monetary
B. monetary ; fiscal
C. fiscal ; monetary
D. fiscal ; fiscal
8 Fiscal policy refers to the manipulation of government income and expenditure to.
A. control the volume and price of money
B. Limit the rate of increaes in incomes
C. Effect the value of the dollar on world financial market.
D. Affect the level of total expenditure output and employment
9 If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.
A. Purchases ; decreases
B. sales ; decreases
C. purchases ; increases
D. sales ; increases
10 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 ______ and the equilibrium level of aggregate output to ______
A. up ; rise
B. up ; fall
C. down ;rise
D. down ; fall

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