PPSC Economics Topic 4 MCQS Test Preparation

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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 corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift _____ the equilibrium level of aggregate output to fall, and the IS curve to shift to the.

Question # 2

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

Question # 3

A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the

Question # 4

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

Question # 5

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 # 6

in The Liquidity trap region

Question # 7

A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___

Question # 8

What technical terminology do economists use to refer to how much the money will multiply as this process unfolds.

Question # 9

Suppose you are a monetarist and believe in the the monetarist rule which the monetary authorities appear to be following if the economy beings to experience a slight increase in the inflation rte you would recommend that the monetary autorities.

Question # 10

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.

Question # 11

The quantity of money demanded varies.

Question # 12

A monetary expansion is characterized by

Question # 13

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

Question # 14

Which of the following would qualify as an aggregate supply shock.

Question # 15

Monetary policy is concerned with influencing.

Question # 16

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

Question # 17

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

Question # 18

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.

Question # 19

An increase in oil prices, such as the oil shocks in the 70 s, lead to _______ there by causing _____

Question # 20

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 _____the equilibrium level of aggregate output to fall and the IS curve to shift to the.

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 "Money deposited for a term is not left in bank vaults but is loaned out by the banks This means that is dollar on deposit can flow back into the banking system one or more times and that dollar can expand the money supply What cnterminlogy do economists use to refer to the proses described in this clip.
A. The multiplier
B. The money multiplier
C. Required reserve ratio
D. Open market operations
2 The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.
A. Velocity of money
B. Nominal output
C. Overall price level
D. Stock of money
3 A good that is used as a medium of exchange as well as being a consumption good is called.
A. A barter money
B. A commodity money
C. A legal tender
D. A debased money
4 Weighted monetary aggregates
A. Ignore the fact that some assets are more money like than others.
B. Are constructed by simply adding up the outstanding amounts of various types of asssets
C. Give greater weight to currency than to savings deposits
D. Value coins more than currency.
5 Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.
A. Money demand declines first then rises when inflation increases
B. Money demand rises
C. The overall effect is ambiguous
D. Money demand declines
6 The limit of an economy's total productive capacity at any given time is set by
A. The amount of money in circulation
B. Business demand for goods and services
C. The level of government spending and taxation
D. the quantity and quality of its productive resources
7 A shift in tastes toward foreign goods ______ net exports and causes the IS curve to shift to the
A. decreases ; right
B. decrease ; left
C. increase ; right
D. increases ; left
8 Fiscal policy refers to the manipulation of government income and expenditure to.
A. control the volume and price of money
B. Limit the rate of increaes in incomes
C. Effect the value of the dollar on world financial market.
D. Affect the level of total expenditure output and employment
9 As the interest sensitivity of investment spending increase.
A. Monetary policy has a larger effect on output
B. Fiscal policy has a larger effect on output
C. The multiplier increases
D. All of the above
10 A decline in the money supply shifts the LM curve to the left causing the interest rate to ________ and output to___
A. rise ; rise
B. rise ; fall
C. fall ; rise
D. fall ; fall

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