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 parable of Riding a Switchback suggests that stabilizing policy.

Question # 2

The intersection of the IS and LM curves captures.

Question # 3

The equilibrium level of income is.

Question # 4

Time lags which often erode effectiveness of monetary and fiscal policy measures represent.

Question # 5

A shift in tastes loward foreign goods______ net exports and causes the quantity of aggregate output demanded to.

Question # 6

Factors that cause the IS curve to shift include.

Question # 7

A tax cut __ disposable income _____ consumption expenditure and shifts the IS curve to the.

Question # 8

Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.

Question # 9

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.

Question # 10

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 # 11

"Transactions" money is money used as a

Question # 12

using money as a medium of exchange.

Question # 13

If a perfectly competitive industry is in long run equilibrium all firms will

Question # 14

In the case of an expansionary ___ policy the interest rate rise while in the case of an expansionary _______ policy the interest rate falls.

Question # 15

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 # 16

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

Question # 17

Commercial banks

Question # 18

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

Question # 19

There are _______ major instrument of monetary policy.

Question # 20

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

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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.
A. 40 percent and Rs. 4,000,000
B. 40 percent and Rs. 10,000,000
C. 25 percent and Rs. 2.500,000
D. 25 percent and Rs.10,000,000
2 A major advantage of monetary over fiscal policy is that monetary policty.
A. Can be put into effect more quickly
B. Affects all sectors of the economy equally
C. Authorities are quicker to see the need for policy
D. Has a more direct and predictable impact on spending.
3 The budget deficit tends to decrease when
A. GDP increases
B. GDP decreases rapidly
C. GDP remains unchanged
D. GDP decreases slightly
4 A 15% VAT is a.
A. Proportional income tax
B. Fixed excise duty
C. Ad valorem indirect tax
D. None of the above
5 The government performs its redistribution function mainly through.
A. Trade practice legislation against anticipative behavior
B. The provision of public goods
C. Taxes and transfer payments
D. Tariffs on imports
6 An item designed as money that is intrinsically worthless could the.
A. A currency note
B. A silver coin
C. A barter item
D. Any tradeable commodity
7 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
8 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
9 A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the
A. right ; left
B. right ; right
C. left ; left
D. left ; right
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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