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

The budget deficit tends to decrease when

Question # 2

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

Question # 3

An expansionary monetary policy

Question # 4

When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.

Question # 5

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 # 6

Money and income are.

Question # 7

The central bank and the government are working against each other if as the government cuts taxes the central bank

Question # 8

The quantity of money demanded varies.

Question # 9

The main source of interest profits for banks is.

Question # 10

The relation between M2 and inflation is tighter than the relation between M1 and inflation because.

Question # 11

As the required reserve ratio is decreased the money multiplier.

Question # 12

In the money market a condition of excess demand for money can be eliminated by a __________ in aggregate output or a ____ in the interest rate both of which reduce the quantity of money demanded.

Question # 13

The government performs its redistribution function mainly through.

Question # 14

How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.

Question # 15

A change in the money supply has a greater effect upon equilibrium income.

Question # 16

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 # 17

Per Capita income is obtained by dividing National income by

Question # 18

One of money's primary roles in the economy comes from the use of money to transfer purchasing power to the future This role of money is called.

Question # 19

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.

Question # 20

An increase in the money supply other thighs equal shifts the ______ curve to the

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
2 To move from point E to point E1 is consistent with.
A. Expectations of a constant price level
B. Adaptive expectations that have no adjustment for the period immediately following a change in the actual price
C. Rational expectations and NCM
D. A and B
3 A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the _______ curve to the __________
A. rise ; LM ;right
B. rise ; IS ; right
C. Fall ; LM ; left
D. rise ;IS; Left
4 A decrease iin money demand other thing equal shifts the _____ curve to the
A. IS ; right
B. Is ; Left
C. LM ; Left
D. LM ; Rfight
5 According to the Laffer curve as tax rates increase tax revenues.
A. Decrease continuously.
B. Initially decrease and then increase
C. Rise continuously
D. Initially increase and then decrease
6 A decrease in the legal reserve ratio from 25% to 20% will
A. Result in light money
B. Be contractionary
C. Increases excess reserves and the potential money multiplier
D. Decrease excess reserves and the potential money multiplier
7 Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.
A. Money demand rises proportionately to the rise in wealth.
B. Money demand rises, but less than proportionately to the rise in wealth.
C. The overall effect in ambiguous
D. Money demand declines
8 Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.
A. Low ; smaller ; high
B. Low ; larger ; high
C. low ; smaller ; middle
D. High ; larger ; low
9 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.
A. Overestimates inflation
B. Underestimates inflation
C. Is an erratic estimate of inflation
D. Remain an accurate estimate of inflation.
10 If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.
A. Purchases ; decreases
B. sales ; decreases
C. purchases ; increases
D. sales ; increases

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