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

00:00
Question # 1

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

Question # 2

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

Question # 3

When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.

Question # 4

In the case of an expansionary ___ policy the interest rate rise while in the case of an expansionary _______ policy the interest rate falls.

Question # 5

An increases in the value of the Rupee makes foreign goods cheaper relative to Pakistan goods, resulting in a _______ in net exports and a __ shift of the IS curve

Question # 6

An increase in the money supply other thighs equal shifts the ______ curve to the

Question # 7

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.

Question # 8

A sale of bonds by the central bank should cause.

Question # 9

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

Question # 10

Which of the following causes M1 demand to decrease.

Question # 11

The main role of the Federal Reserve is to

Question # 12

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

Question # 13

A Political problem with discretionary fiscal policy is the.

Question # 14

The money multiple tells us teh ultimate increase in.

Question # 15

In the Keynesian cross diagram a decline 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

Question # 16

Factor that cause the IS curve to shift include.

Question # 17

If there is a financial panic and increased uncertainty about the return in the stock market and bond market what is the likely effect on money demand.

Question # 18

If the central bank prints more 10 billion and spends them then as a direct result of this action.

Question # 19

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

Question # 20

"Far better for central bankers to get out of the fine tuning business instead they should d try to keep.

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Sr.# Question Answer
1 The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.
A. Bank's line of credit
B. Reserve ratio
C. Current ratio
D. Money multipiler
2 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 _______
A. rise ; left
B. rise ; right
C. fall ; left
D. fall ; right
3 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.
A. Increase the money growth rate slightly
B. Decrease the money growth rate slightly
C. Leave the money supply growth unchanged
D. Enact a one time slight decrease in the money supply
4 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.
5 When a government prints money to finance its expenditures it is likely to cause
A. Unemployment
B. Inflation
C. Deflation
D. Reductions in the use of barter
6 If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.
A. Purchases ; decreases
B. sales ; decreases
C. purchases ; increases
D. sales ; increases
7 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
8 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
9 The intersection of the IS and LM curves captures.
A. The equilibrium of the demand and supply sides of the economy
B. the equivalence of monetary and fiscal policy
C. Joint equilibrium in the goods and money markets
D. All of the above
10 The ____ lag for fiscal policy is generally _____ than it is for monetary policy.
A. Recognition ; shorter
B. Recognition ; longer
C. Implementation ; shorter
D. Implementation ; longer
11 The largest source of tax revenue for the federal government is.
A. The personal income tax
B. The social security tax
C. The property tax
D. The sales tax
12 According to classical models, the level of employment is determined primarily by
A. The level of aggregate demand for goods and services
B. Prices and wages
C. Government taxation
D. Government spending
13 Automatic stabilizers
A. Counter balance fluctuations in economic activity.
B. Reinforce fluctuations in economic activity
C. Do not occur when the economy falls into recession
D. Reduces the size of the deflationary gap
14 The economic logic behind granting central bank's independence from governmental the conduct of monetary policy is.
A. To eliminate seignior age
B. To allow open market operations
C. To enhance the credibility of monetary policy.
D. None of the above
15 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
16 "Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.
A. The multiplier
B. The money multiplier
C. Required reserve ratio
D. Open market operations
17 Factor that cause the IS curve to shift include.
A. Change in autocoups consumer spending
B. Change in taxes
C. Change in government spending
D. All of the above
18 Which school of economic thought suggested that one possible cause of inflation was a push from the cost side.
A. New classical economists
B. Monetarists
C. Marxists
D. Keynesians
19 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.
20 Net taxes are.
A. Government expenditures minus government revenues.
B. Taxes paid by firms and households to the government minus the transfer payments made to firms and household.
C. Taxes paid by firms and household to the government plus transfer payments made to firms and hose holds.
D. Taxes paid by firms and hose hold to the government minus the cost of collecting the taxes.

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