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

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 # 2

The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.

Question # 3

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

Question # 4

The board pumps money out of the economy by

Question # 5

As the required reserve ratio is decreased the money multiplier.

Question # 6

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

Question # 7

A shift in tastes loward foreign goods______ net exports and causes the quantity of aggregate output demanded to.

Question # 8

An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the

Question # 9

Short run contractionary Fiscal policy would result in.

Question # 10

An increase in government spending causes the equilibrium level of aggregate output to_______ at any given interest rate and shifts the ____ curve to the

Question # 11

As the interest sensitivity of money demand increases

Question # 12

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

Question # 13

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

Question # 14

Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.

Question # 15

Commercial banks

Question # 16

One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.

Question # 17

If a perfectly competitive industry is in long run equilibrium all firms will

Question # 18

A Political problem with discretionary fiscal policy is the.

Question # 19

A decline in the value of the rupee makes Pakistan goods cheaper relative to foreign goods, resulting in a _________ in net exports and a ________shifts of the IS curve.

Question # 20

A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.
A. Left ward ; LM
B. Right ; LM
C. Left ward ; IS
D. Left ward ; AD
2 The budget deficit tends to decrease when
A. GDP increases
B. GDP decreases rapidly
C. GDP remains unchanged
D. GDP decreases slightly
3 The purpose of fiscal policy is to
A. Alter the direction of the economy
B. Change people's attitudes toward governemnt
C. Educate people as to the importance of economics
D. Offer insight into the way thing work
4 A monetary expansion is characterized by
A. Rising output and interest rates
B. Rising output and falling interest rates.
C. Constant output and falling interest rates
D. Falling output and interest rates
5 Disposable income is obtained by subtracting ________ taxes from personal income
A. Indirect taxes
B. Direct taxes
C. Subsidies
D. None
6 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
7 A decrease iin money demand other thing equal shifts the _____ curve to the
A. IS ; right
B. Is ; Left
C. LM ; Left
D. LM ; Rfight
8 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
9 The equilibrium level of saving is.
A. Rs.120
B. Rs.75
C. Rs.40
D. Rs.80
10 "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.
A. By buying bonds
B. By selling bonds
C. By changing reserve requirements
D. All of the above

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