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

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Question # 1

A business cycle refers to.

Question # 2

Which of the following would qualify as an aggregate supply shock.

Question # 3

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 # 4

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

Question # 5

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.

Question # 6

An increases in the value of the Rupee makes foreign goods cheaper relative to Pakistan goods, resulting in a _______ in net exports and a __ shift of the IS curve

Question # 7

"The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.

Question # 8

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

Question # 9

Following the work of _____________ in the 1960s, and the controversy associated with these views in the 1970s, there was a revival of interest by economists and government in monetary policy.

Question # 10

The quantity of money demanded varies

Question # 11

The purpose of fiscal policy is to

Question # 12

Which of the following causes M1 demand to decrease.

Question # 13

An example of nondiscretionary fiscal policy would be.

Question # 14

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

Question # 15

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 # 16

In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.

Question # 17

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

Question # 18

Short run contractionary Fiscal policy would result in.

Question # 19

The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.

Question # 20

Which of the following part of M1

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______
A. rise ; LM ;right
B. rise ; IS ; right
C. Fall ; LM ; left
D. rise ;IS; right
2 An increases in the value of the Rupee makes foreign goods cheaper relative to Pakistan goods, resulting in a _______ in net exports and a __ shift of the IS curve
A. fall ; leftward
B. rise ; leftward
C. fall ; rightward
D. rise ; rightward
3 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. up ; left
B. up ; right
C. down ; left
D. down ; right
4 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.
A. Is unchaged
B. Increase by Rs.100,000
C. Increases by Rs. 1,000,000
D. None of these
5 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
6 A checking deposit held at a commercial bank is considered ______ of that bank.
A. An asset
B. Net worth
C. a liability
D. Capital
7 What happens to the money supply if the deficit is financed by selling bonds to the central bank.
A. The money supply increases
B. The money supply decreases
C. The money supply is unaffected
D. We cannot tell what will happen to the money supply
8 As the interest sensitivity of money demand increases
A. The multiplier term increases
B. Fiscal policy has a greater effect on output
C. Monetary policy has a smaller effect on output
D. All of the above
9 As a result of the increase in government expenditures disposable income increases by.
A. Rs.10 billion
B. Rs.9 billion
C. Rs.20 billion
D. Rs.5 billion
10 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

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