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

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

Question # 2

The purpose of financial intermediaries is.

Question # 3

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

Question # 4

A tax increase __________ disposable income ____ consumption expenditure and shifts the IS curve to the.

Question # 5

If the central Bank wished to Tighten money is would.

Question # 6

To move from point E to point E1 is consistent with.

Question # 7

Employment tends to _______ whwn aggregate output.

Question # 8

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.

Question # 9

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

Question # 10

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 # 11

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

Question # 12

An increase in the quantity of money supplied shifts the money supply curve to the_______ and the equilibrium interest rate

Question # 13

An increase in spending those results from expansionary _______ policy cause the interest rate to.

Question # 14

A state of government bonds by the central bank should cause

Question # 15

Which of the following measures is the best measure of money as a medium of exchange.

Question # 16

A 15% VAT is a.

Question # 17

As the interest sensitivity of money demand increases

Question # 18

If the Central Bank wanted to decrease the quantity of money held by the public it would.

Question # 19

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

Question # 20

According to Marshall the basis of consumer surplus is.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Under a fixed exchange rate system an expansionary fiscal policy leads to a
A. Trade account deficit and a capital account surplus.
B. Trade account deficit and a capital account deficit
C. Trade account surplus and a capital account surplus
D. Trade account surplus and a capital accoundt deficit
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 rise and the IS curve to shift to the
A. up ; right
B. up ; left
C. down ;left
D. down ; right
3 Which policies are expenditure changing policies.
A. Currency devaluation and revaluation
B. Import quotas and tariffs
C. Monetary and fiscal policy
D. Wage and price controls
4 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
5 Monetary policy can affect output.
A. this statement is always true
B. This statements always false
C. This statement is true only in the short run
D. This statement is true only in the medium run and the long run
6 Credit constitutes.
A. Saving made available to borrowers
B. A form of liquid asset
C. bank loans converted into commodity money
D. Money used as a standard of deferred payment.
7 The situation in which the imports are greater than exports is termed as.
A. Trade surplus
B. Trade deficit
C. Budget surplus
D. None
8 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
9 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
10 Those who favor setting the target rate of inflation at about 3% believe.
A. The cost of moderate inflation can be minimized by indexing the tax system and bonds
B. that the cost of going to 0% is very low
C. That moderate inflation increases money illusion
D. Believe that moderate inflation aggravates the time inconsistency problem

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