PPSC Economics Topic 4 Monetary & Fiscal Policy

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

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Question # 1

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.

up ; left A
up ; right B
down ; left C
down ; right D

Question # 2

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

right ; fall A
right ; rises B
left ; falls C
left ; rises D

Question # 3

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

IS ; right A
IS ; Left B
LM ; Left C
LM ; right D

Question # 4

Those who favor setting the target rate of inflation at about 3% believe.

The cost of moderate inflation can be minimized by indexing the tax system and bonds A
that the cost of going to 0% is very low B
That moderate inflation increases money illusion C
Believe that moderate inflation aggravates the time inconsistency problem D

Question # 5

Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.

Panel a A
Panel d B
Panel b C
Panel e D

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.

Is unchaged A
Increase by Rs.100,000 B
Increases by Rs. 1,000,000 C
None of these D

Question # 7

An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _ relative to foreign goods and results in a in net exports.

Cheaper ; decline A
Cheaper ; rise B
dearer ; decline C
dearer ; rise D

Question # 8

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

Milton Friedman A
Ronald reagan B
Margaret Thatcher C
John Maynard Keynes D

Question # 9

In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

increase ; increase A
Increase ; decrease B
decrease ; decrease C
decrease ; increase D

Question # 10

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

0.25 A
4 B
0.4 C
Rs.4 billion D

Question # 11

Money is

An indicator of the scarcity of wants A
Anything that sellers accept i exchange for goods and services. B
A form of barter C
Anything that the government classifies as a trade commodity. D

Question # 12

Fiscal policy refers to.

The actions of the central bank in controlling the money supply A
The government's altitude to taxation B
The spending and taxing policies used by the government to influence the economy C
The governments regulation of financial intermediaries. D

Question # 13

"The earlier predictions underestimated currency in circulation and treasury balances at the Fed, both of which drained reserves from the banking system" Lower reserves means.

Lower interest rates A
Lower money supply B
Lower unemployment C
Higher inflation D

Question # 14

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

M1 is larger than M2 A
The demand for M2 is more stable B
M1 includes more liquid assets the M2 C
None of the above answers is correct. D

Question # 15

How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.

Rs.1 billion A
Rs.2 billion B
Rs.0.9 billion C
Rs.0.5 billion D

Question # 16

The implementation lag for monetary policy is generally

Much longer than it is for fiscal policy A
Unrelated to central bank action B
The same as it is for fiscal policy C
Much shorter than it is for fiscal policy. D

Question # 17

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 _____the equilibrium level of aggregate output to fall and the IS curve to shift to the.

up ; left A
up ; right B
down ; left C
down ; right D

Question # 18

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

Because banks might steal your money A
Because currency is more liquid B
Because bank deposits lose value due to inflation C
Because bank deposits lose value due to exchange in interest rates. D

Question # 19

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

The IS curve shifts left ward A
The IS curve shifts right ward B
The money supply increase C
Taxes are cut D

Question # 20

If the State bank of Pakistan wished to pursue a light monetary policy it would.

Lower the required reserve ratio and the statutory liquidity ratio. A
Lower interest rates B
Buy government securities on the open market C
Sell government securities on the open market D

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PPSC Economics Topic 4 MCQS Test Preparation

MCQ's Test For PPSC Economics Topic 4 Monetary & Fiscal Policy

PPSC Economics Topic 4 Monetary & Fiscal Policy

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.

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

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

Those who favor setting the target rate of inflation at about 3% believe.

Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.

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.

An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _______ relative to foreign goods and results in a ______ in net exports.

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

Money is

Fiscal policy refers to.

"The earlier predictions underestimated currency in circulation and treasury balances at the Fed, both of which drained reserves from the banking system" Lower reserves means.

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes.

The implementation lag for monetary policy is generally

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 _____the equilibrium level of aggregate output to fall and the IS curve to shift to the.

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

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

If the State bank of Pakistan wished to pursue a light monetary policy it would.

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An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _ relative to foreign goods and results in a in net exports.