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

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

Question # 2

The situation in which the imports are greater than exports is termed as.

Question # 3

Which policies are expenditure changing policies.

Question # 4

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 # 5

As the interest sensitivity of money demand increases

Question # 6

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

Question # 7

Other things equal a decrease in autonomous consumption shifts the _____ curve to the

Question # 8

A shift in tastes toward Pakistan goods ________ net exports and causes the IS curve to shift to the.

Question # 9

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 # 10

Large difference is inflation rates among countries are almost always the result of large difference in.

Question # 11

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

Question # 12

If the Federal reserve conducts open market __ the money supply __ shifting LM curve to the left.

Question # 13

Under a fixed exchange rate system an expansionary fiscal policy leads to a

Question # 14

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

Question # 15

The quantity of money demanded varies.

Question # 16

In the ISLM frame work a contractionary fiscal policy causes aggregate output to ___________ and the interest rate to

Question # 17

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

Question # 18

Which of the following persons would be considered unemployed.

Question # 19

Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.

Question # 20

What is the significance of underestimating transactions money.

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Sr.# Question Answer
1 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
2 In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.
A. increases ; increase
B. increases ; decrease
C. decreases ; decreases
D. decreases ; increses
3 Which of the following would qualify as an aggregate supply shock.
A. An unexpected increase in oil prices
B. Seasonally expected increase in oil prices
C. An unexpected reduction in consumer confidence
D. an anticipated tax cut
4 Those who favor setting the target rate of inflation at about 3% believe.
A. The cost of moderate inflation can be minimized by indexing the tax system and bonds
B. that the cost of going to 0% is very low
C. That moderate inflation increases money illusion
D. Believe that moderate inflation aggravates the time inconsistency problem
5 Automatic stabilizers
A. Counter balance fluctuations in economic activity.
B. Reinforce fluctuations in economic activity
C. Do not occur when the economy falls into recession
D. Reduces the size of the deflationary gap
6 An example of discretionary fiscal policy would be.
A. The operation of the welfare sate
B. The operation of the processive federal income tax
C. A tax cut adopted to stimulate consumption
D. An interest rate out in plummeted to stimulate consumption
7 If the Bank of Pakistan wished to pursue a tight monetary policy is would.
A. Sell government securities on the open market.
B. Reduce the minimum reserve asset ratio
C. Buy government securities on the open market.
D. Lower interest rates
8 When a government prints money to finance its expenditures it is likely to cause
A. Unemployment
B. Inflation
C. Deflation
D. Reductions in the use of barter
9 "The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.
A. Tax rates
B. The money supply
C. Aggregate demand
D. Government spending
10 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500

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