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

If the original money supply is MSo and the original demand for money is MDo then

Question # 2

An increases in the quantity of money supplied shifts the money supply curve to the _____and the LM curve to the

Question # 3

The purpose of fiscal policy is to

Question # 4

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

Question # 5

A shift in tastes toward Pakistan goods ______ net exports and causes the quantity of aggregate output demanded to______

Question # 6

According to Marshall the basis of consumer surplus is.

Question # 7

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

Question # 8

An autonomous rise in the value of the Rupee makes Pakistan goods _____ expensive relative to foresight goods which ______ net exports

Question # 9

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.

Question # 10

Which of the following persons would be considered unemployed.

Question # 11

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

Question # 12

An autonomous increase in money demand.

Question # 13

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

Question # 14

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

Question # 15

A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate

Question # 16

As the interest sensitivity of money demand increases

Question # 17

An increase in the money supply shifts the LM curve to the right causing the interest rate to __________ and output to.

Question # 18

The quantity of money demanded increases with income Thus if income increases the opportunity cost of holding money demand and re establish equilibrium in the money market This relation is captured by.

Question # 19

Tax incidence is the

Question # 20

When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Per Capita income is obtained by dividing National income by
A. Total labor Force in the country
B. Unemployed Youth in the country
C. Total population of that country
D. None
2 If the State bank of Pakistan wished to pursue a light monetary policy it would.
A. Lower the required reserve ratio and the statutory liquidity ratio.
B. Lower interest rates
C. Buy government securities on the open market
D. Sell government securities on the open market
3 Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.
A. Panel b
B. Panel c
C. Panel a
D. Panel d
4 In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.
A. increases ; increase
B. increases ; decrease
C. decreases ; decreases
D. decreases ; increses
5 "The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.
A. Weaken fiscal policy
B. Avoid monetary policy errors
C. Strengthen the impact of monetary policy
D. Ensure the independence of the central bank
6 The government performs its redistribution function mainly through.
A. Trade practice legislation against anticipative behavior
B. The provision of public goods
C. Taxes and transfer payments
D. Tariffs on imports
7 The Central Bank controls money and credit with the exception of.
A. Controlling the money base through open market operations
B. Controlling reserve requirements
C. Setting the discount rate of interest
D. controlling the stock market
8 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 ______l and the IS curve Curve to shift to the.
A. rise ; left
B. rise ; right
C. fall ; left
D. fall ; right
9 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.
A. up ; rise
B. up ; fall
C. down ; rise
D. down ; fall
10 When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.
A. Increase ; right ; fall; increase
B. increases ; left ; rise ; decrease
C. decreases ; left ;rise ; increases
D. decreases ; left ; fall ; increases

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