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

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

Question # 2

Despite an expansionary monetary policy an economy experiences a recession the recession could occur in spite of the right ward shift of the LM curve if

Question # 3

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

Question # 4

"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 # 5

A monetary expansion is characterized by

Question # 6

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 # 7

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

Question # 8

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

Question # 9

In the Keynesian corss diagram, and cline in autonomous consumer expenditure causes the aggregate demand function to shift down the equilibrium level of aggregate output to___________ and the IS curve to shift to the.

Question # 10

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

Question # 11

The opportunity cost of holding currency decreases when.

Question # 12

An example of discretionary fiscal policy would be.

Question # 13

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

Question # 14

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 # 15

In economics money refers to

Question # 16

According to classical models, the level of employment is determined primarily by

Question # 17

Suppose a new law imposes a tax on all trades of bonds and stock What is the likely effect on money demand.

Question # 18

Keynes suggested that ________ income households consume a ____ proportion of their income than ____ income households.

Question # 19

The near term effect of an unexpected sale of bonds by the central bank is.

Question # 20

In the Keynesian cross diagram an increasing investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to rise and the IS curve to shift to the

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 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.
2 In the Keynesian cross diagram, a decline in autonomous consumer expenditure causes the aggregate demand function to shift ______ and the equilibrium level of aggregate output to.
A. up ; rise
B. up ; fall
C. down ; rise
D. down ; fall
3 An autonomous increase in money demand.
A. Shift the IS curve to the right
B. Shifts the IS curve to the left
C. Shift the LM curve to the right
D. Shift the LM curve to the left
4 If the original money supply is MSo and the original demand for money is MDo then
A. The equilibrium interest rate and savings are 5% and 50
B. The money supply is 200 and equilibrium income is 500
C. The equilibrium interest rate and income are 5% and 600
D. The speculative demand is 25
5 An expansionary monetary policy
A. Reduces interest rates
B. Increases real output
C. Shifts the LM curve to the right
D. All of the above
6 What is the significance of underestimating transactions money.
A. Monetary policy will be over simulating the economy
B. Monetary policy will be putting a drag on the economy
C. there is a need for money that the central bank should be meating.
D. The economy has too much money and there frore not enough spending.
7 Money is
A. An indicator of the scarcity of wants
B. Anything that sellers accept i exchange for goods and services.
C. A form of barter
D. Anything that the government classifies as a trade commodity.
8 The IS curve shifts to the left when
A. Taxes increase
B. Government spending increase
C. The money supply increases
D. All of the above occur
9 A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the
A. right ; left
B. right ; right
C. left ; left
D. left ; right
10 The purpose of financial intermediaries is.
A. To allow more saving than investment
B. To discourage consumption spending
C. To collect income taxes for the government
D. To serve are middlemen between savers and borrowers.

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