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

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

Question # 2

Which of the following part of M1

Question # 3

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

Question # 4

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

Question # 5

Which of the following measures is the best measure of money as a medium of exchange.

Question # 6

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 # 7

There are _______ major instrument of monetary policy.

Question # 8

If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____

Question # 9

Why do people keep currency in their pockets when bank deposits pay interest.

Question # 10

A state of government bonds by the central bank should cause

Question # 11

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 # 12

Tax incidence is the

Question # 13

A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate

Question # 14

If the Bank of Pakistan wished to pursue a tight monetary policy is would.

Question # 15

In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.

Question # 16

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.

Question # 17

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

Question # 18

Money's primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization This function of money is called.

Question # 19

Knowledge of the money supply can lead to good predications of nominal GDP only

Question # 20

If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.

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Sr.# Question Answer
1 To move from point E to point E1 is consistent with.
A. Expectations of a constant price level
B. Adaptive expectations that have no adjustment for the period immediately following a change in the actual price
C. Rational expectations and NCM
D. A and B
2 When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.
A. Is unchaged
B. Increase by Rs.100,000
C. Increases by Rs. 1,000,000
D. None of these
3 An autonomous increase in money demand.
A. Shift the IS curve to the right
B. Shifts the IS curve to the left
C. Shift the LM curve to the right
D. Shift the LM curve to the left
4 As a result of the increase in government expenditures disposable income increases by.
A. Rs.10 billion
B. Rs.9 billion
C. Rs.20 billion
D. Rs.5 billion
5 If the Central Bank wanted to decrease the quantity of money held by the public it would.
A. Sell government securities
B. Buy government securities
C. Lower the legal reserve requirement
D. Raise taxes
6 The situation in which the imports are greater than exports is termed as.
A. Trade surplus
B. Trade deficit
C. Budget surplus
D. None
7 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 _____the equilibrium level of aggregate output to ______l and the IS curve Curve to shift to the.
A. rise ; left
B. rise ; right
C. fall ; left
D. fall ; right
8 An increase in the money supply other thighs equal shifts the ______ curve to the
A. IS ; right
B. Is ; left
C. LM ; Left
D. LM ; right
9 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.
A. Panel a
B. Panel b
C. Panel c
D. Panel d
10 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

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