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

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

Question # 2

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

Question # 3

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

Question # 4

Believers in the monetarist rule assert that

Question # 5

In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

Question # 6

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.

Question # 7

"The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.

Question # 8

In the Keynesian cross diagram, an increase in autonomous consumer function to shift _______ the equilibrium level of aggregate output to rise and the IS curve to shift to the.

Question # 9

Weighted monetary aggregates

Question # 10

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

Question # 11

Factors that cause the IS curve to shift include.

Question # 12

Which of the following causes M1 demand is decrease.

Question # 13

in The Liquidity trap region

Question # 14

The economic logic behind granting central bank's independence from governmental the conduct of monetary policy is.

Question # 15

Commercial banks

Question # 16

A tax increase __________ disposable income ____ consumption expenditure and shifts the IS curve to the.

Question # 17

Which of the following would qualify as an aggregate demand shocks.

Question # 18

The purpose of financial intermediaries is.

Question # 19

An increases in the quantity of money supplied shifts the money supply curve to the _____and the LM curve to the

Question # 20

If the central Bank wished to Tighten money is would.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The quantity of money demanded increases with income Thus if income increases the opportunity cost of holding money demand and re establish equilibrium in the money market This relation is captured by.
A. An upward stopping LM curve
B. A downward sloping L curve
C. A downward sloping IS curve
D. The circular flow of money in the economy.
2 To move from point E to point E1 is consistent with.
A. Expectations of a constant price level
B. Adaptive expectations that have no adjustment for the period immediately following a change in the actual price
C. Rational expectations and NCM
D. A and B
3 What major advantage of monetary policy over fiscal policy does this clipping underline.
A. Monetary policy is more effective
B. Monetary policy is lss discriminatory
C. Monetary policy can influence interest rates
D. Monetary policy can be undertaken more quickly
4 Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.
A. Low ; smaller ; high
B. Low ; larger ; high
C. low ; smaller ; middle
D. High ; larger ; low
5 Under a fixed exchange rate system an expansionary fiscal policy leads to a
A. Trade account deficit and a capital account surplus.
B. Trade account deficit and a capital account deficit
C. Trade account surplus and a capital account surplus
D. Trade account surplus and a capital accoundt deficit
6 The real money demand doubles while the nominal money supply is unchanged what happens to the price level.
A. The price level increase by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
7 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
8 Which of the following part of M1
A. Stock negotiating accounts
B. Automatic transfer system accounts
C. Negotiable orders of withdrawal accounts
D. Demand deposits of mutual saving banks.
9 The money multiple tells us teh ultimate increase in.
A. The income level due to an increase in the money base
B. The money supply due to an increase in the money base.
C. The money supply due to an increase in the income level
D. The income level due to an increase in the money supply
10 a contractionary monetary policy
A. Reduces interest rtes
B. Reduces real output
C. shifts the LM curve to the right
D. All of the above

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