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

Try The 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 Political problem with discretionary fiscal policy is the.

Question # 2

The real money demand doubles while the nominal money supply is unchanged what happens to the price level.

Question # 3

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

Question # 4

An example of discretionary fiscal policy would be.

Question # 5

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

Question # 6

Which policies are expenditure changing policies.

Question # 7

An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the

Question # 8

According to classical models, the level of employment is determined primarily by

Question # 9

Factor that cause the IS curve to shift include.

Question # 10

The quantity of money demanded varies

Question # 11

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

Question # 12

Why would corporations want to achieve zero balances in their checking accounts.

Question # 13

The purpose of financial intermediaries is.

Question # 14

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 # 15

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 # 16

The ____ lag for fiscal policy is generally _____ than it is for monetary policy.

Question # 17

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

Question # 18

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

Question # 19

The IS curve shifts to the left when

Question # 20

Tax incidence is the

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Sr. # Question Answer
1 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 _______

A. rise ; LM ;right

B. rise ; IS ; right

C.Fall ; LM ; left

D. rise ;IS; right

2 A monetary action consistent with the central bank selling bonds in the open market would be.

A. An increase in the reserve ratio

B. A reduction in the discount rate of interest

C.An increase in government spending.

D. a reduction in excise taxes

3 What is the significance of underestimating transactions money.

A. Monetary policy will be over simulating the economy

B. Monetary policy will be putting a drag on the economy

C.there is a need for money that the central bank should be meating.

D. The economy has too much money and there frore not enough spending.

4 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

5 In economics money refers to

A. Income

B. Wealth

C.Assets use and accepted an payment

D. Currency

6 Why would corporations want to achieve zero balances in their checking accounts.

A. To earn more interest

B. To avoid paying taxes

C.to keep a low profile

D. To circumvent banking regulations

7 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

8 A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.

A. Reduce

B. Increase

C.Have no effect on

D. Double

9 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.

A. Pont Eo to point E1

B. Pont Eo to point E2

C.Pont Eo to point E3

D. Pont E3 to point E2

10 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

11 An item designed as money that is intrinsically worthless could the.

A. A currency note

B. A silver coin

C.A barter item

D. Any tradeable commodity

12 Money's primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization This function of money is called.

A. Store of value

B. Medium of exchange

C.Standard of deferred payment

D. Unit of account

13 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.

A. Revenue from value added tax

B. Level of company profits

C.Level of unemployment

D. Average level of wages

14 In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift down the equilibrium level of aggregate output to___________ and the IS curve to shift to the.

A. up ; left

B. up ; right

C.down ; left

D. down ; right

15 Why do people keep currency in their pockets when bank deposits pay interest.

A. Because banks might steal your money

B. Because currency is more liquid

C.Because bank deposits lose value due to inflation

D. Because bank deposits lose value due to exchange in interest rates.

16 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

17 A decrease in fully autonomous investment other things equal shifts the ______ curve to the

A. IS ; right

B. IS ; Left

C.LM ; Left

D. LM ; right

18 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

19 An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the

A. Net exports LM right

B. Net exports LM left

C.Money demand IS right

D. Money demand LM left

20 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

A. up ; right

B. up ; left

C.down ;left

D. down ; right

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