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

By financial crowding our economists mean

Question # 2

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

Question # 3

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.

Question # 4

According to the supply side model a reduction in the tax rate.

Question # 5

A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.

Question # 6

The board pumps money out of the economy by

Question # 7

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

Question # 8

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 # 9

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

Question # 10

Which of the following causes M1 demand to decrease.

Question # 11

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

Question # 12

What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

Question # 13

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

Question # 14

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

Question # 15

"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 # 16

The opportunity cost of holding currency decrease when

Question # 17

If firms paying employees monthly began paying them weakly then the demand for money would.

Question # 18

The IS curve shifts to the left when

Question # 19

Monetary policy is concerned with influencing.

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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 _______
A. rise ; LM ;right
B. rise ; IS ; right
C. Fall ; LM ; left
D. rise ;IS; right
2 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
3 A change in the money supply has a greater effect upon equilibrium income.
A. The more interest sensitive private sector spending is.
B. The less interest sensitive private sector spending is.
C. The smaller the expenditure multiplier is
D. The more interest sensitive money holdings are to the rate of interest.
4 Fiscal policy refers to the manipulation of government income and expenditure to.
A. control the volume and price of money
B. Limit the rate of increaes in incomes
C. Effect the value of the dollar on world financial market.
D. Affect the level of total expenditure output and employment
5 If the central Bank wished to Tighten money is would.
A. Lower the discount rate
B. Sell government securities
C. Lower the legal reserve ratio
D. Lower the tax rate
6 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500
7 Automatic stabilizers
A. Counter balance fluctuations in economic activity.
B. Reinforce fluctuations in economic activity
C. Do not occur when the economy falls into recession
D. Reduces the size of the deflationary gap
8 A good that is used as a medium of exchange as well as being a consumption good is called.
A. A barter money
B. A commodity money
C. A legal tender
D. A debased money
9 An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the.
A. Revenue from value added tax
B. Level of company profits
C. Level of unemployment
D. Average level of wages
10 During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____
A. LM ; rightward
B. IS ; rightwards
C. LM ; Leftward
D. IS ; Leftward

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