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

In the money market a condition of excess supply of money cna be eliminated by a _________ in aggregate output or a __ in the interest rate , both of which increase the quantity of money demanded.

Question # 2

Time lags which often erode effectiveness of monetary and fiscal policy measures represent.

Question # 3

Which of the following causes M1 demand is decrease.

Question # 4

A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______

Question # 5

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

Question # 6

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

Question # 7

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

Question # 8

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

Question # 9

As a result of the increase in government expenditures disposable income increases by.

Question # 10

Other things equal a decrease in autonomous consumption shifts the _____ curve to the

Question # 11

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

Question # 12

The IS curve shifts to the left when

Question # 13

The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.

Question # 14

Believers in the monetarist rule assert that

Question # 15

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 ______ and the equilibrium level of aggregate output to ______

Question # 16

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

Question # 17

During period of inflation

Question # 18

Which of the following would qualify as an aggregate demand shocks.

Question # 19

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.

Question # 20

An increases in the value of the Rupee makes foreign goods cheaper relative to Pakistan goods, resulting in a _______ in net exports and a __ shift of the IS curve

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PPSC Economics Chapter 4 Important MCQ's

Sr.# Question Answer
1 The equilibrium level of income is.
A. Rs. 360
B. Rs.600
C. Rs.440
D. Rs.500
2 A tax increase __________ disposable income ____ consumption expenditure and shifts the IS curve to the.
A. Increase; increases ; right
B. Increase ; decreases ; left
C. decreases ; increases ; left
D. decreases ; decreases ; left
3 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
A. The IS curve shifts left ward
B. The IS curve shifts right ward
C. The money supply increase
D. Taxes are cut
4 The increase in base money divided by the corresponding induced increasing commercial bank deposits is the.
A. Bank's line of credit
B. Reserve ratio
C. Current ratio
D. Money multipiler
5 A monetary expansion is characterized by
A. Rising output and interest rates
B. Rising output and falling interest rates.
C. Constant output and falling interest rates
D. Falling output and interest rates
6 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.
7 An increase in expected inflation is likely ot cause.
A. A decline in the demand for real balances
B. an increase in the demand for real balances.
C. No change i the demand for real balances
D. No change in the demand for real balances only of the income elasticity of real money demand is zero.
8 Intermediate goods are meant for
A. Direct use by the consumers
B. Further processing
C. The term do not exist
D. None
9 Fiscal policy is purposeful movements in _____designed to direct an economy
A. Interest rate
B. Legal structures
C. Government regulations
D. D Government spending and taxes
10 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.
A. up ; rise
B. up ; fall
C. down ;rise
D. down ; fall

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