PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 Total utility of a commodity is measured by which price of that commodity. Value in use. Value in exchange Both of above None of above
2 Which of the following events will lead to a decrease in the demand for money. An increase in the level of aggregate output. A decrease in the supply of money A decrease in the interest rate a decrease in the price level
3 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. An upward stopping LM curve A downward sloping L curve A downward sloping IS curve The circular flow of money in the economy.
4 A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier. Reduce Increase Have no effect on Double
5 A checking deposit held at a commercial bank is considered ______ of that bank. An asset Net worth a liability Capital
6 An item designed as money that is intrinsically worthless could the. A currency note A silver coin A barter item Any tradeable commodity
7 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. Lower interest rates Buy government securities on the open market Sell government securities on the open market
8 The increase in base money divided by the corresponding induced increasing commercial bank deposits is the. Bank's line of credit Reserve ratio Current ratio Money multipiler
9 The automatic stabilization function of fiscial policy ensures that government expenditures _________ and government revenues __ during recessions. decrease ; decrease decrease ; increase Increase ; decrease increase ; increase
10 The main source of interest profits for banks is. Checking account fees Loans Government securities Savigng accounts
11 The purpose of financial intermediaries is. To allow more saving than investment To discourage consumption spending To collect income taxes for the government To serve are middlemen between savers and borrowers.
12 Commercial banks Are financial intermediaries that offer demand deposits. Are owned by the Federal Reserve Are non profit banking institutions Are overseen by the Federal savings and loan insurance corporation.
13 Which of the following part of M1 Stock negotiating accounts Automatic transfer system accounts Negotiable orders of withdrawal accounts Demand deposits of mutual saving banks.
14 Credit constitutes. Saving made available to borrowers A form of liquid asset bank loans converted into commodity money Money used as a standard of deferred payment.
15 When your grandmother keeps her savings hidden under her mattress she is using money as. a standard of deferred panyment A comfortable thing for sleeping A medium of exchange A store of value
16 using money as a medium of exchange. Requires people to math goods wanted with goods available. Reduces the range of feasible exchanges in the economy Inhibits economic transactions Reduces the need for barter in the economy.
17 The function of money do not include. an exchange of purchasing power A unit of account A medium of exchange A store of value
18 an asset that can easily be exchanged for goods and services is called a. Financial asset Barter like asset Illegitimate asset Liquid asset
19 Money is An indicator of the scarcity of wants Anything that sellers accept i exchange for goods and services. A form of barter Anything that the government classifies as a trade commodity.
20 Monetary policy is concerned with influencing. The general level of money wages The level of government expenditure The price and availability of money The level of shares on the stock market
21 The main role of the Federal Reserve is to Administer the government on the state of the economy Overses the operations of the financial system and monetary management. Establish the value of the dollar and official interest rates Provide advice to the government on the state of the economy.
22 The contractionary effect on private investment spending due to financing requirements of government deficit pushing up interest rates is known by this term. Crowding out Recognition lag Public sector borrowing requirement Fiscal drag
23 Automatic stabilizers Counter balance fluctuations in economic activity. Reinforce fluctuations in economic activity Do not occur when the economy falls into recession Reduces the size of the deflationary gap
24 Fiscal policy refers to the manipulation of government income and expenditure to. control the volume and price of money Limit the rate of increaes in incomes Effect the value of the dollar on world financial market. Affect the level of total expenditure output and employment
25 The government performs its redistribution function mainly through. Trade practice legislation against anticipative behavior The provision of public goods Taxes and transfer payments Tariffs on imports
26 During period of inflation Those people who have fixed incomes benefit Every one's real income falls those people who enter long term wage agreements benefit Those people whose real income rises faster than the general price level benefit
27 Which of the following persons would be considered unemployed. a house wife A person who worked more than 20 hours in a family owned business A 15 years old looking for summer employment A recent college graduate looking for her fist job
28 When considering any kind of economics indicator, prices are important because. They reflect the value of goods and services. They are established by the government to control population 's needs They categorize goods and services by their weight Historically they have proved to the good predictors of futures unemployment.
29 A business cycle refers to. Fluctuations in the general price level changes in the long term growth pattern of the CPI The ups and downs of real GDP Fluctuations in the level of corporate.
30 Increasing the government budget deficit. Increases output in the long run Decreases output in the short run Decreases output in the long run. Decreases the interest rate in the medium run.
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