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 earlier predictions underestimated currency in circulation and treasury balances at the Fed, both of which drained reserves from the banking system" Lower reserves means.

Question # 2

The government performs its redistribution function mainly through.

Question # 3

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 # 4

Employment tends to _______ whwn aggregate output.

Question # 5

If the nominal money supply doubles while real money demand is unchanged what happens to the price level.

Question # 6

Which of the following would qualify as an aggregate demand shocks.

Question # 7

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 __________

Question # 8

using money as a medium of exchange.

Question # 9

If the central bank prints more 10 billion and spends them then as a direct result of this action.

Question # 10

"The problem with monetarism is that its advocates have seen it as infallible over short periods of time and wish it to be rigid in its application over all periods of time "The advocates of monetarism wish it to the rigid in its application over all periods of time to.

Question # 11

There are _______ major instrument of monetary policy.

Question # 12

Weighted monetary aggregates

Question # 13

A monetary expansion is characterized by

Question # 14

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 # 15

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

Question # 16

Total utility of a commodity is measured by which price of that commodity.

Question # 17

When there is no change in central banking holding of international reserve balances a country's

Question # 18

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

Question # 19

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

Question # 20

An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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
2 Which of the following causes M1 demand to decrease.
A. A fall in the tax rate
B. An increase in income
C. A fall in the interest rate
D. An increase in the use of credit cards
3 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
4 using money as a medium of exchange.
A. Requires people to math goods wanted with goods available.
B. Reduces the range of feasible exchanges in the economy
C. Inhibits economic transactions
D. Reduces the need for barter in the economy.
5 When considering any kind of economics indicator, prices are important because.
A. They reflect the value of goods and services.
B. They are established by the government to control population 's needs
C. They categorize goods and services by their weight
D. Historically they have proved to the good predictors of futures unemployment.
6 Tax incidence is the
A. Ultimate distribution of a tax's burden
B. Measure of the inpat the tax has on employment and output
C.
Behavior of shifting the tax to another party
D. Structure of the tax
7 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
8 Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.
A. Panel b
B. Panel c
C. Panel a
D. Panel d
9 Large difference is inflation rates among countries are almost always the result of large difference in.
A. Productivity
B. Real income growth
C. The growth rates of real money demand
D. The growth rates of nominal money supplies
10 An increase in autonomous consumer expenditure causes the equilibrium levelof 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

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