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

A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate

Question # 2

During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____

Question # 3

The situation in which the imports are greater than exports is termed as.

Question # 4

By controlling the monetary base economists mean

Question # 5

The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.

Question # 6

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

Question # 7

Which of the following causes M1 demand is decrease.

Question # 8

The equilibrium level of income is.

Question # 9

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 # 10

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

Question # 11

Suppose velocity is constant and the real income elasticity of the demand for money is less than one then estimating inflation as money growth rate minus real growth rate.

Question # 12

"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.

Question # 13

Following the work of _____________ in the 1960s, and the controversy associated with these views in the 1970s, there was a revival of interest by economists and government in monetary policy.

Question # 14

The main role of the Federal Reserve is to

Question # 15

The limit of an economy's total productive capacity at any given time is set by

Question # 16

In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to

Question # 17

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 # 18

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.

Question # 19

The IMF is an agency charged with providing.

Question # 20

If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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 _______
A. rise; Lm ; RIGHT
B. RISE ; is; right
C. fall ; IS; Left
D. rise ; LM; left
2 A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate
A. Rises ; rises
B. rises ; falls
C. falls ; rises
D. falls ; falls
3 What's the most common way for a central bank to reduce the money supply.
A. Collect higher taxes
B. Sell bonds to the public
C. Buy bounds from the government
D. Buy bonds from the public
4 Actual equilibrium is Rs. 1,500 billion and full employment is Rs. 2,500 MPC = 0.75 taxes are zero , and prices are adjustable To eliminate the observed deflationary gap , the government should.
A. Increase G by Rs.1,000
B. Decrease G by Rs.250
C. Increase G by less than Rs.100
D. Decrease G by more than Rs.250 but less than Rs.1000
5 The opportunity cost of holding currency decreases when.
A. Income decreases
B. The interest rate on bonds decrease
C. Buying newly issued government bonds directly from the central bank
D. Buying newly issued government bonds directly to the central bank.
6 Money or paper currency serves at least _______ functions.
A. Three
B. Four
C. Five
D. Seven
7 Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.
A. Increase the money growth rate slightly
B. Decrease the money growth rate slightly
C. Leave the money supply growth unchanged
D. Enact a one time slight decrease in the money supply
8 A major advantage of monetary over fiscal policy is that monetary policy
A. Can be put into effect more quickly
B. Affects all sectors of the economy equally
C. Authorities are quicker to see the need for policy
D. Has a more direct and predictable impact on spending.
9 Which policies are expenditure changing policies.
A. Currency devaluation and revaluation
B. Import quotas and tariffs
C. Monetary and fiscal policy
D. Wage and price controls
10 A major advantage of monetary over fiscal policy is that monetary policty.
A. Can be put into effect more quickly
B. Affects all sectors of the economy equally
C. Authorities are quicker to see the need for policy
D. Has a more direct and predictable impact on spending.

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