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

00:00
Question # 1

A sale of bonds by the central bank should cause.

Question # 2

As a result of the increase in government expenditures disposable income increases by.

Question # 3

Fiscal policy refers to.

Question # 4

According to Marshall the basis of consumer surplus is.

Question # 5

Money or paper currency serves at least _______ functions.

Question # 6

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

Question # 7

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

Question # 8

The budget deficit tends to decrease when

Question # 9

A monetary expansion is characterized by

Question # 10

In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.

Question # 11

If the State bank of Pakistan wished to pursue a light monetary policy it would.

Question # 12

Identify the three motives of money demand.

Question # 13

A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

Question # 14

The board pumps money out of the economy by

Question # 15

Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.

Question # 16

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

Question # 17

"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.

Question # 18

An autonomous increase in the value of the domestic exchange rate.

Question # 19

Tax incidence is the

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 An increase in spending those results from expansionary _______ policy cause the interest rate to.
A. fiscal ; rise
B. fiscal ; fall
C. incomes ; rise
D. income ; fall
2 Large difference is inflation rates among countries are almost always the result of large difference in.
A. Productivity
B. Real income growth
C. The growth rates of real money demand
D. The growth rates of nominal money supplies
3 Money's primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization This function of money is called.
A. Store of value
B. Medium of exchange
C. Standard of deferred payment
D. Unit of account
4 When considering any kind of economics indicator, prices are important because.
A. They reflect the value of goods and services.
B. They are established by the government to control population 's needs
C. They categorize goods and services by their weight
D. Historically they have proved to the good predictors of futures unemployment.
5 If firms paying employees monthly began paying them weakly then the demand for money would.
A. Rise and income would rise
B. Rise and income would fall
C. Fall and income would rise
D. Fall and income would fall
6 In the Keynesian cross diagram, an 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 What is the significance of underestimating transactions money.
A. Monetary policy will be over simulating the economy
B. Monetary policy will be putting a drag on the economy
C. there is a need for money that the central bank should be meating.
D. The economy has too much money and there frore not enough spending.
8 "Far better for central bankers to get out of the fine tuning business instead they should d try to keep.
A. Taxes low
B. Budgets balanced
C. Money growth low
D. Government spending in check
9 The budget deficit tends to decrease when
A. GDP increases
B. GDP decreases rapidly
C. GDP remains unchanged
D. GDP decreases slightly
10 The opportunity cost of holding currency decrease when
A. Income decreases
B. The interest rate on bonds decreases
C. The interest rate on money decrease wealth decrease
D. Wealth decreases

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