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

The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term.

Question # 2

The aggregate demand curve is downward sloping because a higher price level.

Question # 3

A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.

Question # 4

In the ISLM framework the decreasing investment spending believed by Keynes to be the cause of the Great Depression would be illustrated by a shift of the ____ curve to the.

Question # 5

The investment demand curve shows the relationship between the levels of.

Question # 6

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

Question # 7

"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.

Question # 8

When a nations money supply is Rs.1200 billion and the nominal Gros National product is Rs.4800 billion the velocity of money is.

Question # 9

A major advantage of monetary over fiscal policy is that monetary policty.

Question # 10

Which of the following causes M1 demand is decrease.

Question # 11

The board pumps money out of the economy by

Question # 12

Weighted monetary aggregates

Question # 13

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

Question # 14

Fiscal policy refers to.

Question # 15

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

Question # 16

The Central Bank controls money and credit with the exception of.

Question # 17

Which of the following events will lead to a decrease in the demand for money.

Question # 18

The money multiple tells us teh ultimate increase in.

Question # 19

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

Question # 20

During periods of negative demand shocks deficit target reductions such as those mandated in the Gramm Rudman Hollings Act would tend to.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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.
2 "Transactions" money is money used as a
A. Store of value
B. Unit of account
C. Medium of exchange
D. Standard of deferred payment
3 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
4 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
5 "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.
A. Lower interest rates
B. Lower money supply
C. Lower unemployment
D. Higher inflation
6 Monetary policy can affect output.
A. this statement is always true
B. This statements always false
C. This statement is true only in the short run
D. This statement is true only in the medium run and the long run
7 Actual equilibrium is Rs. 1,500 billion and full employment is Rs. 2,500 MPC = 0.75 taxes are zero , and prices are adjustable To eliminate the observed deflationary gap , the government should.
A. Increase G by Rs.1,000
B. Decrease G by Rs.250
C. Increase G by less than Rs.100
D. Decrease G by more than Rs.250 but less than Rs.1000
8 Following the work of _____________ in the 1960s, and the controversy associated with these views in the 1970s, there was a revival of interest by economists and government in monetary policy.
A. Milton Friedman
B. Ronald Reagan
C. Margaret Thatcher
D. John Maynard Keynes
9 If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from.
A. Pont Eo to point E1
B. Pont Eo to point E2
C. Pont Eo to point E3
D. Pont E3 to point E2
10 The largest source of tax revenue for the federal government is.
A. The personal income tax
B. The social security tax
C. The property tax
D. The sales tax

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