PPSC Economics Topic 4 Monetary & Fiscal Policy

Top Scorers Of PPSC Economics Topic 4 Monetary & Fiscal Policy MCQ`s Test

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zaheer hussain 18 - Jan - 2024 14 Min 06 Sec 11/20
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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	The quantity of money demanded varies	A. Directly with both prices and output B. Inversely with both prices and output C. Directly with prices and inversely with output D. Inversely with prices and directly with output
3	The parable of Riding a Switchback suggests that stabilizing policy.	A. Is not sufficiently stimulating or contra citing the economy at any time B. Is desirable C. Is effective D. Is stimulating or contracting the economy at the wrong times.
4	As the required reserve ratio is decreased the money multiplier.	A. Could either increase or decrease B. Remains the same as long as banks hold no excess reserves C. Increase D. Decreases
5	Knowledge of the money supply can lead to good predications of nominal GDP only	A. If the price level is stable B. If the money supply is stable C. Over very short periods of time D. If the determinants of velocity are known
6	A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.	A. fall ;LM; right B. fall ;IS; Left C. fall ;LM; Left D. rise ;LM; Rifht
7	The real money demand doubles while the nominal money supply is unchanged what happens to the price level.	A. The price level increase by a factor of four B. The price level doubles C. The price level is unchanged D. The price level falls by one half.
8	As the interest sensitivity of investment spending increase.	A. Monetary policy has a larger effect on output B. Fiscal policy has a larger effect on output C. The multiplier increases D. All of the above
9	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
10	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.	A. up ; left B. up ; right C. down ; left D. down ; right

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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

An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise

The limit of an economy's total productive capacity at any given time is set by

The IS curve shifts to the left when

Other things equal a decrease in autonomous consumption shifts the _____ curve to the

The intersection of the IS and LM curves captures.

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

Credit constitutes.

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

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

An example of discretionary fiscal policy would be.

According to classical models, the level of employment is determined primarily by

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

"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.

using money as a medium of exchange.

When a government prints money to finance its expenditures it is likely to cause

In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.

According to the Laffer curve as tax rates increase tax revenues.

In an economy experience high interest rates and high unemployment The ISLM frame work predicts that _________ policy has been too.

a contractionary monetary policy

Tax incidence is the

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Top Scorers Of PPSC Economics Topic 4 Monetary & Fiscal Policy MCQ`s Test

PPSC Economics Chapter 4 Important MCQ's

Test Questions

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An increase in money ___ shifts the LM curve to the _ causing the interest rate to fall and output to rise

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

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

In the money market a condition of excess supply of money cna be eliminated by a _______ in aggregate output or a in the interest rate , both of which increase the quantity of money demanded.