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

00:00
Question # 1

If Federal reserve conducts open market sales, the money supply ___ shifting the LM curve to the_____

Question # 2

As the required reserve ratio is decreased the money multiplier.

Question # 3

using money as a medium of exchange.

Question # 4

An autonomous rise in the value of the Rupee makes Pakistan goods _____ expensive relative to foresight goods which ______ net exports

Question # 5

Why would corporations want to achieve zero balances in their checking accounts.

Question # 6

The limit of an economy's total productive capacity at any given time is set by

Question # 7

What's the most common way for a central bank to reduce the money supply.

Question # 8

At any given level of the interest rate expectations are likely to be___________ optimistic and planned investment is likely to be ______ when _________ is growing rapidly than when it is growing slowly or falling.

Question # 9

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

Question # 10

Why do people keep currency in their pockets when bank deposits pay interest.

Question # 11

A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate

Question # 12

Consider the five panels of the figure on the previous page in which panel would fiscal policy be the strongest.

Question # 13

A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______

Question # 14

Employment tends to _______ whwn aggregate output.

Question # 15

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

Question # 16

When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply.

Question # 17

During period of inflation

Question # 18

"Transactions" money is money used as a

Question # 19

A Political problem with discretionary fiscal policy is the.

Question # 20

An autonomous rise in __________ note causes by a change in the price level aggregate output of the interest shifts the _________ curve to the

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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 __________
A. rise ; LM ;right
B. rise ; IS ; right
C. Fall ; LM ; left
D. rise ;IS; Left
2 "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.
A. By buying bonds
B. By selling bonds
C. By changing reserve requirements
D. All of the above
3 Aggregate output and the interest rate are ______ related to government spending and are ___ related to taxes.
A. Positively ; positively
B. Positively ; negatively
C. negatively ; positively
D. negatively ; negatively
4 The real money demand doubles while the nominal money supply is unchanged what happens to the price level.
A. The price level increase by a factor of four
B. The price level doubles
C. The price level is unchanged
D. The price level falls by one half.
5 Increasing the government budget deficit.
A. Increases output in the long run
B. Decreases output in the short run
C. Decreases output in the long run.
D. Decreases the interest rate in the medium run.
6 The board pumps money out of the economy by
A. Buying bonds
B. Selling bond
C. Creating cash
D. Lowering the reserve requirements.
7 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
8 Which of the following measures is the best measure of money as a medium of exchange.
A. M1
B. M2
C. M3
D. None of the above
9 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
10 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

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