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 board pumps money out of the economy by

Question # 2

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

Question # 3

Over time the wealth of society increases and payments technologies get more efficient What is the effect on money demand of these two changes.

Question # 4

"Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.

Question # 5

Which of the following measures is the best measure of money as a medium of exchange.

Question # 6

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 # 7

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 # 8

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

Question # 9

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

Question # 10

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.

Question # 11

"Although he didn't say so, this may ultimately compet the central bank to resort increasingly to managing the money supply by managing banks excess cash reserves the stuff from which the banks create loans". How would the central bank manages these excess reserves.

Question # 12

The quantity of money demanded varies

Question # 13

In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.

Question # 14

A tax increase __________ disposable income ____ consumption expenditure and shifts the IS curve to the.

Question # 15

Weighted monetary aggregates

Question # 16

Those who favor setting the target rate of inflation at about 3% believe.

Question # 17

Which of the following persons would be considered unemployed.

Question # 18

Which school of economic thought suggested that one possible cause of inflation was a push from the cost side.

Question # 19

A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the

Question # 20

The ____ lag for fiscal policy is generally _____ than it is for monetary policy.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 "Transactions" money is money used as a
A. Store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment
2 An autonomous increase in money demand.
A. Shift the IS curve to the right
B. Shifts the IS curve to the left
C. Shift the LM curve to the right
D. Shift the LM curve to the left
3 Which policies are expenditure changing policies.
A. Currency devaluation and revaluation
B. Import quotas and tariffs
C. Monetary and fiscal policy
D. Wage and price controls
4 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
5 The aggregate demand curve is downward sloping because a higher price level.
A. Makes people wealthier and so they spend more
B. Causes higher wages and so people spend more
C. Cuts the real value of income and so people spend less
D. Decreases the real supply of money decreasing spending.
6 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
7 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
8 By controlling the monetary base economists mean
A. Controlling the money multiplier
B. Restricting the amount of cash in circulation
C. Not allowing commercial banks to issue notes and coins
D. making banks keep a certain % of their assets as M0
9 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.
A. An upward stopping LM curve
B. A downward sloping L curve
C. A downward sloping IS curve
D. The circular flow of money in the economy.
10 An increase in government spending 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 ; LM ;Left
C. fall ; IS ; Left
D. rise ; IS ;right

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