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

Which of the following causes M1 demand is decrease.

Question # 2

According to Marshall the basis of consumer surplus is.

Question # 3

Time lags which often erode effectiveness of monetary and fiscal policy measures represent.

Question # 4

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

Question # 5

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 # 6

When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.

Question # 7

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

Question # 8

If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.

Question # 9

The ratio of debt to GDP will be larger

Question # 10

According to the supply side model a reduction in the tax rate.

Question # 11

What happens to the money supply if the deficit is financed by selling bonds to the general public.

Question # 12

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

Question # 13

"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.

Question # 14

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

Question # 15

In the ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.

Question # 16

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

Question # 17

"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 # 18

A state of government bonds by the central bank should cause

Question # 19

Large difference is inflation rates among countries are almost always the result of large difference in.

Question # 20

in The Liquidity trap region

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
2 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.
A. up ; rise
B. up ; fall
C. down ;rise
D. down ; fall
3 When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.
A. Is unchaged
B. Increase by Rs.100,000
C. Increases by Rs. 1,000,000
D. None of these
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 In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to
A. Increase ; increase
B. Increase ; decrease
C. decrees ; decrease
D. decrease ;Increase
6 The quantity of money demanded varies
A. Directly with both prices and output
B. Inversely with both prices and output
C. Directly with prices and inversely with output
D. Inversely with prices and directly with output
7 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.
A. Overestimates inflation
B. Underestimates inflation
C. Is an erratic estimate of inflation
D. Remain an accurate estimate of inflation.
8 Which of the following persons would be considered unemployed.
A. a house wife
B. A person who worked more than 20 hours in a family owned business
C. A 15 years old looking for summer employment
D. A recent college graduate looking for her fist job
9 A sale of bonds by the central bank should cause.
A. A fall in the interest rate
B. An increase in the money supply
C. A decrease in the reserves of the commercial banks
D. An increase in the commercial banks loans to the public
10 One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.
A. store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment

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