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

Increasing the government budget deficit.

Question # 2

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

Question # 3

Which of the following events will lead to a decrease in the demand for money.

Question # 4

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 # 5

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

Question # 6

When a government prints money to finance its expenditures it is likely to cause

Question # 7

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the _______ curve to the __________

Question # 8

According to classical models, the level of employment is determined primarily by

Question # 9

The near term effect of an unexpected sale of bonds by the central bank is.

Question # 10

Monetary policy is concerned with influencing.

Question # 11

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 # 12

A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______

Question # 13

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

Question # 14

If the original money supply is MSo and the original demand for money is MDo then

Question # 15

An item designed as money that is intrinsically worthless could the.

Question # 16

When considering any kind of economics indicator, prices are important because.

Question # 17

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

Question # 18

Money and income are.

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

"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.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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.
A. fall ; leftward
B. rise ; leftward
C. fall ; rightward
D. rise ; rightward
2 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
3 A decline in taxes __ consumer expenditure and shifts the _ curve shifts to the.
A. Raises ; LM; Right
B. Lowers; IS ; left
C. raises ; IS; right
D. Lower ; LM; left
4 In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.
A. increases ; increase
B. increases ; decrease
C. decreases ; decreases
D. decreases ; increses
5 As the interest sensitivity of money demand increases
A. The multiplier term increases
B. Fiscal policy has a greater effect on output
C. Monetary policy has a smaller effect on output
D. All of the above
6 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
7 An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise
A. demand ; right
B. demand ; left
C. supply ; right
D. supply ; left
8 The board pumps money out of the economy by
A. Buying bonds
B. Selling bond
C. Creating cash
D. Lowering the reserve requirements.
9 In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.
A. A relative large increase in Y, a smaller increate n P
B. A relative large increase in P, a smaller increase in Y
C. Both Y and P increasing with an percentage
D. Only Y increase
10 The relation between M2 and inflation is tighter than the relation between M1 and inflation because.
A. M1 is larger than M2
B. The demand for M2 is more stable
C. M1 includes more liquid assets the M2
D. None of the above answers is correct.

Test Questions