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

A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___

Question # 2

What major advantage of monetary policy over fiscal policy does this clipping underline.

Question # 3

If the Bank of Pakistan wished to pursue a tight monetary policy is would.

Question # 4

The quantity of money demanded varies

Question # 5

"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.

Question # 6

A decrease iin money demand other thing equal shifts the _____ curve to the

Question # 7

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

Question # 8

Identify the three motives of money demand.

Question # 9

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

Question # 10

A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the

Question # 11

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 ______ and the equilibrium level of aggregate output to ______

Question # 12

In the Keynesian cross diagram a decline 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 # 13

A decrease iin money demand other thing equal shifts the _____ curve to the

Question # 14

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

Question # 15

The near term effect of an unexpected sale of bonds by the central bank is.

Question # 16

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 # 17

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

Question # 18

The money multiple tells us teh ultimate increase in.

Question # 19

The purpose of fiscal policy is to

Question # 20

Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 By financial crowding our economists mean
A. What the government borrows cannot be used for private investment
B. Government borrowing drives up interest rates.
C. Bank of England controls on commercial bank lending
D. Credit rationing
2 A checking deposit held at a commercial bank is considered ______ of that bank.
A. An asset
B. Net worth
C. a liability
D. Capital
3 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
A. up ; right
B. up ; left
C. down ;left
D. down ; right
4 Fiscal policy refers to the manipulation of government income and expenditure to.
A. control the volume and price of money
B. Limit the rate of increaes in incomes
C. Effect the value of the dollar on world financial market.
D. Affect the level of total expenditure output and employment
5 A change in the money supply has a greater effect upon equilibrium income.
A. The more interest sensitive private sector spending is.
B. The less interest sensitive private sector spending is.
C. The smaller the expenditure multiplier is
D. The more interest sensitive money holdings are to the rate of interest.
6 A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the
A. decreases ; right
B. decrease ; left
C. increase ; right
D. increases ; left
7 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.
A. rise ; rise
B. rise; fall
C. fall ; rise
D. fall ; fall
8 The ____ lag for fiscal policy is generally _____ than it is for monetary policy.
A. Recognition ; shorter
B. Recognition ; longer
C. Implementation ; shorter
D. Implementation ; longer
9 Commercial banks
A. Are financial intermediaries that offer demand deposits.
B. Are owned by the Federal Reserve
C. Are non profit banking institutions
D. Are overseen by the Federal savings and loan insurance corporation.
10 If the State bank of Pakistan wished to pursue a light monetary policy it would.
A. Lower the required reserve ratio and the statutory liquidity ratio.
B. Lower interest rates
C. Buy government securities on the open market
D. Sell government securities on the open market

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