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

Which of the following causes M1 demand to decrease.

Question # 2

Which of the following is not an important variable in growth accounting calculations.

Question # 3

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 # 4

Fiscal policy refers to.

Question # 5

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.

Question # 6

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

Question # 7

The largest source of tax revenue for the federal government is.

Question # 8

During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____

Question # 9

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

Question # 10

By controlling the monetary base economists mean

Question # 11

An increase in government spending causes the equilibrium level of aggregate output to_______ at any given interest rate and shifts the ____ curve to the

Question # 12

In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to

Question # 13

In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.

Question # 14

A decrease iin money demand other thing equal shifts the _____ curve to the

Question # 15

If the central Bank wished to Tighten money is would.

Question # 16

A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______

Question # 17

Which of the following events will lead to a decrease in the demand for money.

Question # 18

A decrease in the legal reserve ratio from 25% to 20% will

Question # 19

What's the most common way for a central bank to reduce the money supply.

Question # 20

Actual equilibrium is Rs. 1,500 billion and full employment is Rs. 2,500 MPC = 0.75 taxes are zero , and prices are adjustable To eliminate the observed deflationary gap , the government should.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 Money and income are.
A. Mirror image of each other
B. Two quite different concepts
C. Both measured as a per annum flow
D. Two ways of looking at the same thing.
2 At any given level of the interest rate expectations are likely to be___________ optimistic and planned investment is likely to be ______ when _________ is growing rapidly than when it is growing slowly or falling.
A. Less ; higher ; output.
B. more ; higher ; output
C. less ; lower ; unplanned investment
D. more ; lower ; unplanned investment
3 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.
A. IS ;right
B. IS ;Left
C. LM ; Left
D. LM ; Right
4 The budget deficit tends to decrease when
A. GDP increases
B. GDP decreases rapidly
C. GDP remains unchanged
D. GDP decreases slightly
5 The implementation lag for monetary policy is generally
A. Much longer than it is for fiscal policy
B. Unrelated to central bank action
C. The same as it is for fiscal policy
D. Much shorter than it is for fiscal policy.
6 If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from.
A. Pont Eo to point E1
B. Pont Eo to point E2
C. Pont Eo to point E3
D. Pont E3 to point E2
7 Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.
A. Left ward ; LM
B. Right ; LM
C. Left ward ; IS
D. Left ward ; AD
8 The relation between M2 and inflation is tighter than the relation between M1 and inflation because.
A. M1 is larger than M2
B. The demand for M2 is more stable
C. M1 includes more liquid assets the M2
D. None of the above answers is correct.
9 Increasing the government budget deficit.
A. Increases output in the long run
B. Decreases output in the short run
C. Decreases output in the long run.
D. Decreases the interest rate in the medium run.
10 The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.
A. Crowding out
B. Recognition lag
C. Public sector borrowing requirement
D. Fiscal drag

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