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

"Far better for central bankers to get out of the fine tuning business instead they should d try to keep.

Question # 2

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

Question # 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.

Question # 4

Suppose velocity is constant and the real income elasticity of the demand for money is less than one then estimating inflation as money growth rate minus real growth rate.

Question # 5

a contractionary monetary policy

Question # 6

The government performs its redistribution function mainly through.

Question # 7

An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the.

Question # 8

A major advantage of monetary over fiscal policy is that monetary policty.

Question # 9

Money's primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization This function of money is called.

Question # 10

"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.

Question # 11

The IS curve shifts to the left when

Question # 12

According to the supply side model a reduction in the tax rate.

Question # 13

The Central Bank controls money and credit with the exception of.

Question # 14

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

Question # 15

"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.

Question # 16

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

Question # 17

If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____

Question # 18

According to Marshall the basis of consumer surplus is.

Question # 19

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

Question # 20

Under system fixed exchange rates which of the following policies promotes internal balance for a nation.

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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 Which of the following causes M1 demand to decrease.
A. A fall in the tax rate
B. An increase in income
C. A fall in the interest rate
D. An increase in the use of credit cards
3 If young busness professionals in Pakistan suddenly decide that driving japan made cars is an important status symbol net exports will tend to _____________causing aggregate demand to.
A. fall ; fall
B. fall ; rise
C. rise ; fall
D. rise ; rise
4 In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.
A. A relative large increase in Y, a smaller increate n P
B. A relative large increase in P, a smaller increase in Y
C. Both Y and P increasing with an percentage
D. Only Y increase
5 A business cycle refers to.
A. Fluctuations in the general price level
B. changes in the long term growth pattern of the CPI
C. The ups and downs of real GDP
D. Fluctuations in the level of corporate.
6 A sale of bonds by the central bank should cause.
A. A fall in the interest rate
B. An increase in the money supply
C. A decrease in the reserves of the commercial banks
D. An increase in the commercial banks loans to the public
7 If the central Bank wished to Tighten money is would.
A. Lower the discount rate
B. Sell government securities
C. Lower the legal reserve ratio
D. Lower the tax rate
8 The IMF is an agency charged with providing.
A. Technical assistance to stock market and financial market problems.
B. Loans for post World War II reconstruction
C. Short term credit for international balance of payments deficits
D. Bonds denominated in U.S. dollars as a loan to LDCs
9 If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.
A. Purchases ; decreases
B. sales ; increases
C. purchases ; increases
D. sales ; decreases
10 According to Marshall the basis of consumer surplus is.
A. Law of diminishing marginal utility.
B. Law of equal marginal utility
C. Law of proportions
D. All of the above

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