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 ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.

Question # 2

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 # 3

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

Question # 4

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 # 5

Per Capita income is obtained by dividing National income by

Question # 6

As the interest sensitivity of investment spending increase.

Question # 7

The implementation lag for monetary policy is generally

Question # 8

Other things equal a decrease in autonomous consumption shifts the _____ curve to the

Question # 9

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 # 10

When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.

Question # 11

Believers in the monetarist rule assert that

Question # 12

How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.

Question # 13

A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______

Question # 14

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

Question # 15

The main role of the Federal Reserve is to

Question # 16

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 # 17

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

Question # 18

Disposable income is obtained by subtracting ________ taxes from personal income

Question # 19

Money and income are.

Question # 20

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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 fall and the IS curve to shift to the.
A. up ; left
B. up ; right
C. down ; left
D. down ; right
2 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.
A. up ; left
B. up ; right
C. down ; left
D. down ; right
3 "The earlier predictions underestimated currency in circulation and treasury balances at the Fed, both of which drained reserves from the banking system" Lower reserves means.
A. Lower interest rates
B. Lower money supply
C. Lower unemployment
D. Higher inflation
4 The automatic stabilization function of fiscial policy ensures that government expenditures _________ and government revenues __ during recessions.
A. decrease ; decrease
B. decrease ; increase
C. Increase ; decrease
D. increase ; increase
5 There are _______ major instrument of monetary policy.
A. Three
B. Four
C. Five
D. None
6 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.
A. up ; rise
B. up ; fall
C. down ; rise
D. down ; fall
7 In the ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.
A. IS ;right
B. IS ;Left
C. LM ; Left
D. LM ; Right
8 The parable of Riding a Switchback suggests that stabilizing policy.
A. Is not sufficiently stimulating or contra citing the economy at any time
B. Is desirable
C. Is effective
D. Is stimulating or contracting the economy at the wrong times.
9 Factors that cause the IS curve to shift include.
A. Changes in autonomous consumer spending
B. Changes in government spending
C. Changes in investment spending related to business confidence
D. All of the above
10 Identify the three motives of money demand.
A. Accumulative
B. Speculative precautionary
C. Speculative transaction precautionary
D. Precautionary special trisection

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