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

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

Question # 2

"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.

Question # 3

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

Question # 4

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 # 5

If the Bank of Pakistan wished to pursue an expansionary monetary policy it would.

Question # 6

When considering any kind of economics indicator, prices are important because.

Question # 7

An autonomous increase in money demand.

Question # 8

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

Question # 9

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

Question # 10

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 # 11

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

Question # 12

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

Question # 13

The Central Bank controls money and credit with the exception of.

Question # 14

Which of the following would qualify as an aggregate demand shocks.

Question # 15

The main role of the Federal Reserve is to

Question # 16

Under system fixed exchange rates which of the following policies promotes internal balance for a nation.

Question # 17

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 # 18

Fiscal policy is purposeful movements in _____designed to direct an economy

Question # 19

The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.

Question # 20

The quantity of money demanded varies.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 In the Keynesian cross diagram a decrease in investment spending because companies become more pessimistic 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
2 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
3 A decrease iin money demand other thing equal shifts the _____ curve to the
A. IS ; right
B. Is ; Left
C. LM ; Left
D. LM ; Rfight
4 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
5 In an economy experience high interest rates and high unemployment The ISLM frame work predicts that _________ policy has been too.
A. fiscal ; expansionary
B. fiscal ; contractionary
C. monetary ; expansionary
D. monetary ; contractionary
6 During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____
A. LM ; Leftward
B. LM ; rightward
C. IS ; Leftward
D. IS ; rightwards
7 The market price of bonds can fluctuate depending on
A. How many bonds were sold
B. Who bought the bonds
C. The amount of the coupon
D. The interest rate
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 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
10 If the Bank of Pakistan wished to pursue an expansionary monetary policy it would.
A. Increase the minimum reserve asset ratio
B. Sell government securities on the open market
C. Buy government securities on the open market
D. Raise interest rates.

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