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

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 # 2

A good that is used as a medium of exchange as well as being a consumption good is called.

Question # 3

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 # 4

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

Question # 5

The equilibrium level of saving is.

Question # 6

How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.

Question # 7

A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate

Question # 8

"The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.

Question # 9

The money multiple tells us teh ultimate increase in.

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

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

Question # 12

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

Question # 13

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

Question # 14

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

Question # 15

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

Question # 16

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

Question # 17

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

Question # 18

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

Question # 19

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

Question # 20

The ____ lag for fiscal policy is generally _____ than it is for monetary policy.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
2 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
3 The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.
A. Bank's line of credit
B. Reserve ratio
C. Current ratio
D. Money multipiler
4 The main source of interest profits for banks is.
A. Checking account fees
B. Loans
C. Government securities
D. Savigng accounts
5 If young busness professionals in Pakistan suddenly decide that driving japan made cars is an important status symbol net exports will tend to _____________causing aggregate demand to.
A. fall ; fall
B. fall ; rise
C. rise ; fall
D. rise ; rise
6 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
7 When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.
A. more ; iincreases
B. less ; increases
C. more ; decreases
D. more ; increases
8 The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.
A. Crowding out
B. Recognition lag
C. Public sector borrowing requirement
D. Fiscal drag
9 Which of the following would qualify as an aggregate demand shocks.
A. An unexpected increase in oil prices
B. A seasonally expected increase in oil prices
C. An unexpected reduction in consumer confidence
D. an anticipated tax cut
10 When your grandmother keeps her savings hidden under her mattress she is using money as.
A. a standard of deferred panyment
B. A comfortable thing for sleeping
C. A medium of exchange
D. A store of value

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