PPSC Economics Topic 4 Monetary & Fiscal Policy

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PPSC Economics Chapter 4 Important MCQ's

Sr.#	Question	Answer
1	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.	A. up ; left B. up ; right C. down ; left D. down ; right
2	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.
3	You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.	A. If you live in a 1st best world. B. If you live in a 2nd best world C. If the tax rates on some of the items are prohibitively high D. Either of the above
4	Money and income are.	A. Mirror image of each other B. Two quite different concepts C. Both measured as a per annum flow D. Two ways of looking at the same thing.
5	Knowledge of the money supply can lead to good predications of nominal GDP only	A. If the price level is stable B. If the money supply is stable C. Over very short periods of time D. If the determinants of velocity are known
6	"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.	A. Weaken fiscal policy B. Avoid monetary policy errors C. Strengthen the impact of monetary policy D. Ensure the independence of the central bank
7	When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.	A. Increase ; right ; fall; increase B. increases ; left ; rise ; decrease C. decreases ; left ;rise ; increases D. decreases ; left ; fall ; increases
8	The ratio of debt to GDP will be larger	A. The lower the real interest rate B. The lower the growth rate of output C. The lower the in initial debt ratio D. The lower the ratio of the primary deficit to GDP
9	Which of the following causes M1 demand to decrease.	A. A fall in the tax rate B. An increase in income C. A fall in the interest rate D. An increase in the use of credit cards
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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PPSC Economics Topic 4 MCQS Test Preparation

MCQ's Test For PPSC Economics Topic 4 Monetary & Fiscal Policy

PPSC Economics Topic 4 Monetary & Fiscal Policy

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

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.

"The earlier predictions underestimated currency in circulation and treasury balances at the Fed, both of which drained reserves from the banking system" Lower reserves means.

A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______

Net taxes are.

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

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

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

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 ______l and the IS curve Curve to shift to the.

Which of the following part of M1

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.

Employment tends to _______ whwn aggregate output.

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

In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.

You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.

The function of money do not include.

Automatic stabilizers

If the Bank of Pakistan wished to pursue a tight monetary policy is would.

As the interest sensitivity of money demand increases

Prepare Complete Set Wise PPSC Economics Topic 4 Monetary & Fiscal Policy MCQs Online With Answers

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Set 12

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Set 14

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Top Scorers Of PPSC Economics Topic 4 Monetary & Fiscal Policy MCQ`s Test

PPSC Economics Chapter 4 Important MCQ's

Test Questions

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A shift in tastes toward Pakistan goods net exports and causes the quantity of aggregate output demanded to

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

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to ___ at any given interest rate and shifts the curve to the

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 __l and the IS curve Curve to shift to the.

In the money market a condition of excess supply of money cna be eliminated by a _______ in aggregate output or a in the interest rate , both of which increase the quantity of money demanded.