PPSC Economics Topic 4 MCQS Test Preparation

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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

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 # 2

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 _______

Question # 3

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

Question # 4

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

Question # 5

Per Capita income is obtained by dividing National income by

Question # 6

A major advantage of monetary over fiscal policy is that monetary policty.

Question # 7

" 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.

Question # 8

Large difference is inflation rates among countries are almost always the result of large difference in.

Question # 9

Which of the following is not an important variable in growth accounting calculations.

Question # 10

According to Marshall the basis of consumer surplus is.

Question # 11

What is the significance of underestimating transactions money.

Question # 12

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

Question # 13

In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to.

Question # 14

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

Question # 15

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 # 16

Under a fixed exchange rate system an expansionary fiscal policy leads to a

Question # 17

If the nominal money supply doubles while real money demand is unchanged what happens to the price level.

Question # 18

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 # 19

"The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
2 The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.
A. Milton Friedman
B. Ronald reagan
C. Margaret Thatcher
D. John Maynard Keynes
3 A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.
A. Increases ; increases ; right
B. Increases ; decreases ; left
C. decreases ; increases ; left
D. decreases ; decreases ; right
4 During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____
A. LM ; rightward
B. IS ; rightwards
C. LM ; Leftward
D. IS ; Leftward
5 Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.
A. Money demand declines first then rises when inflation increases
B. Money demand rises
C. The overall effect is ambiguous
D. Money demand declines
6 Fiscal policy is purposeful movements in _____designed to direct an economy
A. Interest rate
B. Legal structures
C. Government regulations
D. D Government spending and taxes
7 Which of the following would qualify as an aggregate supply shock.
A. An unexpected increase in oil prices
B. Seasonally expected increase in oil prices
C. An unexpected reduction in consumer confidence
D. an anticipated tax cut
8 A Political problem with discretionary fiscal policy is the.
A. Contractionary bias
B. Big state bias
C. Expansionary bias
D. Over reaction bias
9 "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
10 According to the supply side model a reduction in the tax rate.
A. Could reduce the size of any budget deficit
B. Would have no effect on output
C. Would have no effect on consumption
D. None of the above

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