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

Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.

Question # 2

There are ______ methods of measuring GDP

Question # 3

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.

Question # 4

In the Keynesian corss diagra, an increase in autonomous consumer expenditure causes the aggregate demand function to shift up the equilibrium level of aggregate output to _______ and the IS curve to shift to the _______

Question # 5

How do the banks gain from this corporate behavior.

Question # 6

Weighted monetary aggregates

Question # 7

The IMF is an agency charged with providing.

Question # 8

Automatic stabilizers

Question # 9

Increasing the government budget deficit.

Question # 10

A major advantage of monetary over fiscal policy is that monetary policy

Question # 11

"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 # 12

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

Question # 13

A monetary expansion is characterized by

Question # 14

The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.

Question # 15

The automatic stabilization function of fiscial policy ensures that government expenditures _________ and government revenues __ during recessions.

Question # 16

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.

Question # 17

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

Question # 18

What happens to the money supply if the deficit is financed by selling bonds to the central bank.

Question # 19

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 _______

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Per Capita income is obtained by dividing National income by
A. Total labor Force in the country
B. Unemployed Youth in the country
C. Total population of that country
D. None
2 As a result of the increase in government expenditures disposable income increases by.
A. Rs.10 billion
B. Rs.9 billion
C. Rs.20 billion
D. Rs.5 billion
3 A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.
A. Demand ; right
B. demand ; left
C. supply ; right
D. supply ; left
4 Given fixed exchange rates assume Pakistan initiates contractionary monetary ad fiscal policies to combat inflation. these policies will also.
A. Reduce a balance of payments surplus
B. Reduce a balance of payments deficit
C. Increases both imports and exports
D. Decrease both imports and exports
5 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.
6 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
7 The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.
A. Crowding out
B. Recognition lag
C. Public sector borrowing requirement
D. Fiscal drag
8 How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.
A. Rs.1 billion
B. Rs.2 billion
C. Rs.0.9 billion
D. Rs.0.5 billion
9 An autonomous increase in money demand.
A. Shift the IS curve to the right
B. Shifts the IS curve to the left
C. Shift the LM curve to the right
D. Shift the LM curve to the left
10 Believers in the monetarist rule assert that
A. Lags are long and variable
B. the economy cna be stabilized by automatic mechanisms
C. The central bank should keep the money supply growth constant
D. All of the above

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