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

In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to.

Question # 2

A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate

Question # 3

Which of the following persons would be considered unemployed.

Question # 4

An example of discretionary fiscal policy would be.

Question # 5

In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.

Question # 6

Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.

Question # 7

What major advantage of monetary policy over fiscal policy does this clipping underline.

Question # 8

Under a fixed exchange rate system an expansionary fiscal policy leads to a

Question # 9

The board pumps money out of the economy by

Question # 10

What's the most common way for a central bank to reduce the money supply.

Question # 11

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

Question # 12

The intersection of the IS and LM curves captures.

Question # 13

A Political problem with discretionary fiscal policy is the.

Question # 14

In an economy experience high interest rates and high unemployment The ISLM frame work predicts that _________ policy has been too.

Question # 15

Total utility of a commodity is measured by which price of that commodity.

Question # 16

The market price of bonds can fluctuate depending on

Question # 17

According to the Laffer curve as tax rates increase tax revenues.

Question # 18

An increase in money demand other thing equal shifts the ____ curve to the___

Question # 19

using money as a medium of exchange.

Question # 20

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise
A. demand ; right
B. demand ; left
C. supply ; right
D. supply ; left
2 According to the supply side model a reduction in the tax rate.
A. Could reduce the size of any budget deficit
B. Would have no effect on output
C. Would have no effect on consumption
D. None of the above
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 Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.
A. Left ward ; LM
B. Right ; LM
C. Left ward ; IS
D. Left ward ; AD
5 The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.
A. 40 percent and Rs. 4,000,000
B. 40 percent and Rs. 10,000,000
C. 25 percent and Rs. 2.500,000
D. 25 percent and Rs.10,000,000
6 When considering any kind of economics indicator, prices are important because.
A. They reflect the value of goods and services.
B. They are established by the government to control population 's needs
C. They categorize goods and services by their weight
D. Historically they have proved to the good predictors of futures unemployment.
7 The purpose of fiscal policy is to
A. Alter the direction of the economy
B. Change people's attitudes toward governemnt
C. Educate people as to the importance of economics
D. Offer insight into the way thing work
8 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.
9 The investment demand curve shows the relationship between the levels of.
A. Investment and consumption
B. Consumption and Interest rate
C. Investment and interest rate
D. None
10 A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the
A. decreases ; right
B. decrease ; left
C. increase ; right
D. increases ; left

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