PPSC Economics Topic 4 Monetary & Fiscal Policy

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 ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

increase ; increase A
Increase ; decrease B
decrease ; decrease C
decrease ; increase D

Question # 2

The purpose of financial intermediaries is.

To allow more saving than investment A
To discourage consumption spending B
To collect income taxes for the government C
To serve are middlemen between savers and borrowers. D

Question # 3

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

Purchases ; decreases A
sales ; increases B
purchases ; increases C
sales ; decreases D

Question # 4

According to Marshall the basis of consumer surplus is.

Law of diminishing marginal utility. A
Law of equal marginal utility B
Law of proportions C
All of the above D

Question # 5

An increase in money demand other thing equal shifts the __ curve to the_

IS ; right A
IS ; Left B
LM ; Left C
LM ; right D

Question # 6

A checking deposit held at a commercial bank is considered ______ of that bank.

An asset A
Net worth B
a liability C
Capital D

Question # 7

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.

Pont Eo to point E1 A
Pont Eo to point E2 B
Pont Eo to point E3 C
Pont E3 to point E2 D

Question # 8

A decline in the money______ shifts the LM curve to the causing the interest rate to rise and output to fall.

Demand ; right A
demand ; left B
supply ; right C
supply ; left D

Question # 9

An example of nondiscretionary fiscal policy would be.

The operation of the welfare state A
A Federal jobs program adopted to stimulate consumption B
A tax cut adopted to stimulate consumption C
An interest rate cut implemented to stimulate consumption D

Question # 10

A change in the money supply has a greater effect upon equilibrium income.

The more interest sensitive private sector spending is. A
The less interest sensitive private sector spending is. B
The smaller the expenditure multiplier is C
The more interest sensitive money holdings are to the rate of interest. D

Question # 11

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

The cost of moderate inflation can be minimized by indexing the tax system and bonds A
that the cost of going to 0% is very low B
That moderate inflation increases money illusion C
Believe that moderate inflation aggravates the time inconsistency problem D

Question # 12

An increases in the quantity of money supplied shifts the money supply curve to the _____and the LM curve to the

right ; left A
right ; right B
left ; left C
left ; right D

Question # 13

The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.

Velocity of money A
Nominal output B
Overall price level C
Stock of money D

Question # 14

If the State bank of Pakistan wished to pursue a light monetary policy it would.

Lower the required reserve ratio and the statutory liquidity ratio. A
Lower interest rates B
Buy government securities on the open market C
Sell government securities on the open market D

Question # 15

The central bank and the government are working against each other if as the government cuts taxes the central bank

Sells government bonds A
Lowers the discount rate B
Increase the money supply C
Decrease the legal reserve requirements D

Question # 16

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

k increases and h increase A
k increases and h decrease B
k decrease and h increase C
k decrease and h decrease D

Question # 17

Which of the following causes M1 demand to decrease.

A fall in the tax rate A
An increase in income B
A fall in the interest rate C
An increase in the use of credit cards D

Question # 18

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

The amount of money in circulation A
Business demand for goods and services B
The level of government spending and taxation C
the quantity and quality of its productive resources D

Question # 19

A reduction in government spending causes the equilibrium level of aggregate output to ___ at any given interest rate and shifts the curve to the.

fall ;LM; right A
fall ;IS; Left B
fall ;LM; Left C
rise ;LM; Rifht D

Question # 20

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

Productivity A
Real income growth B
The growth rates of real money demand C
The growth rates of nominal money supplies D

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PPSC Economics Topic 4 MCQS Test Preparation

MCQ's Test For PPSC Economics Topic 4 Monetary & Fiscal Policy

PPSC Economics Topic 4 Monetary & Fiscal Policy

In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

The purpose of financial intermediaries is.

If the Federal reserve conducts open market ________ the money supply _______ shifting the LM curve to the right.

According to Marshall the basis of consumer surplus is.

An increase in money demand other thing equal shifts the ____ curve to the___

A checking deposit held at a commercial bank is considered ______ of that bank.

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 decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

An example of nondiscretionary fiscal policy would be.

A change in the money supply has a greater effect upon equilibrium income.

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

An increases in the quantity of money supplied shifts the money supply curve to the _____and the LM curve to the

The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.

If the State bank of Pakistan wished to pursue a light monetary policy it would.

The central bank and the government are working against each other if as the government cuts taxes the central bank

Equilibrium in the money markets can be expressed by the equation i = 9k/h) Y -M/h. The slope of LM decrease when

Which of the following causes M1 demand to decrease.

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

A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.

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

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

An increase in money demand other thing equal shifts the __ curve to the_

A decline in the money______ shifts the LM curve to the causing the interest rate to rise and output to fall.

A reduction in government spending causes the equilibrium level of aggregate output to ___ at any given interest rate and shifts the curve to the.