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

"Transactions" money is money used as a

Question # 2

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

Question # 3

The opportunity cost of holding currency decreases when.

Question # 4

As the required reserve ratio is decreased the money multiplier.

Question # 5

Those who favor setting the target rate of inflation at about 3% believe.

Question # 6

The rate of which central bank lends to commercial banks is known as

Question # 7

A decrease iin money demand other thing equal shifts the _____ curve to the

Question # 8

If the central bank prints more 10 billion and spends them then as a direct result of this action.

Question # 9

Short run contractionary Fiscal policy would result in.

Question # 10

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 # 11

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.

Question # 12

Fiscal policy is purposeful movements in _____designed to direct an economy

Question # 13

An expansionary monetary policy

Question # 14

Which of the followig does not shift the IS curve .

Question # 15

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

Question # 16

A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.

Question # 17

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

Question # 18

Identify the three motives of money demand.

Question # 19

using money as a medium of exchange.

Question # 20

A decline in taxes __ consumer expenditure and shifts the _ curve shifts to the.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 A Political problem with discretionary fiscal policy is the.
A. Contractionary bias
B. Big state bias
C. Expansionary bias
D. Over reaction bias
2 A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.
A. fall ;LM; right
B. fall ;IS; Left
C. fall ;LM; Left
D. rise ;LM; Rifht
3 An increase in the money supply other thighs equal shifts the ______ curve to the
A. IS ; right
B. Is ; left
C. LM ; Left
D. LM ; right
4 You move some of your savings account balance into your checking account.
A. M2 falls and M1 rises
B. M1 falls and M2 rises
C. M1 and M2 are unchanged
D. M1 rises and M2 remains unchanged
5 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.
A. Fiscal drag
B. The Laffer curve
C. Bracket creep
D. Debt burden
6 An increase in the quantity of money supplied shifts the money supply curve to the_______ and the equilibrium interest rate
A. right ; falls
B. right ; rises
C. left ; falls
D. left ; rises
7 Increasing the government budget deficit.
A. Increases output in the long run
B. Decreases output in the short run
C. Decreases output in the long run.
D. Decreases the interest rate in the medium run.
8 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
9 Net taxes are.
A. Government expenditures minus government revenues.
B. Taxes paid by firms and households to the government minus the transfer payments made to firms and household.
C. Taxes paid by firms and household to the government plus transfer payments made to firms and hose holds.
D. Taxes paid by firms and hose hold to the government minus the cost of collecting the taxes.
10 Fiscal policy is purposeful movements in _____designed to direct an economy
A. Interest rate
B. Legal structures
C. Government regulations
D. D Government spending and taxes

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