PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

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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. The multiplier The money multiplier Required reserve ratio Open market operations
2 What happens to the money supply if the deficit is financed by selling bonds to the central bank. The money supply increases The money supply decreases The money supply is unaffected We cannot tell what will happen to the money supply
3 What happens to the money supply if the deficit is financed by selling bonds to the general public. The money supply increaes The money supply decreases The money supply is unaffected We cannot tell what will happen to the money supply
4 The board pumps money out of the economy by Buying bonds Selling bond Creating cash Lowering the reserve requirements.
5 What technical terminology do economists use to refer to how much the money will multiply as this process unfolds. The multiplier The money multiplier Required reserve ratio Open market operations
6 How do the banks gain from this corporate behavior. More loans can be made Tax free profits can be made Interest rates can be increased By circumvent banking regulations
7 Why would corporations want to achieve zero balances in their checking accounts. To earn more interest To avoid paying taxes to keep a low profile To circumvent banking regulations
8 What is the significance of underestimating transactions money. Monetary policy will be over simulating the economy Monetary policy will be putting a drag on the economy there is a need for money that the central bank should be meating. The economy has too much money and there frore not enough spending.
9 "Transactions" money is money used as a Store of value Unit of account Medium of exchange Standard of deferred payment
10 According to the life cycle hypothesis consumption is related to. Current income Past peak income Expected lifetime income Price expectations over one's life time
11 According to the permanent income hypothesis all increases in . Permanent income are saved Permanent income are consumed transitory income are saved Transitory income are consumed
12 Keynes considered subjective and objective factors. Determinants of investment Determinants of business will ingress to supply Unimportant determinants of consumption. Important determinants of consumption.
13 Changes in subjective or objective factors. Never affect the consumption function Always cause downward shifts of the consumption function Always cause upward shifts of the consumption function May cause upward or downward shifts of the consumption function
14 Which of the following is the second law of gossen. Law of equal marginal utility. Law of equi product Theory of indifference curve Law of diminishing marginal utility.
15 Disinflationary demand management policies. Achieve a lower rate of inflation without causing a decreases in output. Reduce output but have no initial effect on the inflation rate Require an increase in government spending. Require a reduction in the growth rate of the nominal money supply.
16 An economy is in inflationary equilibrium A sustained increase in government appending shifts. DAD rightward for one period DAD and DAS right ward permanently DAD right ward and a new equilibrium DAD right ward and a new equilibrium.
17 At point of satiety marginal utilityis. Positive Negative Maximum Zero
18 The dynamic aggregate demand schedule shifts rightward when there is an increase in. The expected rate of inflation ceteris paribus The growth rate of the nominal money supply ceteris paribus The income tax rate ceteris paribus the current inflation rate celeries paribus
19 Marginal utility is equal to average utility at that time when average utility is. Increasing Maximum Falling Minimum
20 Suppose there is full employment and positively sloped aggregate supply schedule A decrees in taxes increases. The price level and real output the prie level but has no effect on real output Real output but has no effect on the price level The nominal and real wage
21 Suppose there is full employment and a neoclassical aggregate supply schedule A 105 increases in the nominal money supply. Has no effect upon the price level Increase the rate of interest Increase the nominal wage 10% Increase the real money supply 10%
22 The data indicates that country A in billions of rupees is experiencing a A deficit of Rs.60 A surplus of Rs. 300 Deficit of Rs.900 A deficit of Rs. 500
23 A rise in the exchange rate value of the rupee will most likely cause. A dollar to be worth less in learns of other currencies. Imports to decrease Exports to increase The balance of payments curve to shift to the left
24 Which of the following in a graph with interest rates and income on the vertical and horizontal axes, does not shift the balance of payments curve to the right. Capital flow restrictions Export quotas Export subsidies Import tariffs
25 An import function is 100+0.1 Y and exports are exogenous. If income (Y) is 500, and there is a trade deficit of 50, then exports are. 0 25 75 100
26 The regression equation for consumption as a function of disposable income is C = -60 + 0.90Y .the standard error of Y is 30 and the standard error of estimate is 9.5 What is the 95% confidence interval for C when Y is Rs. 1000 billion. Rs.941 to Rs. 979 Rs.900 to Rs. 1,020 Rs.821 to Rs.859 Rs.780 to Rs.900
27 Two independent variables are not independent of each other in a multiple regression problem The analyst most likely will be confronted with. The problem of autocorrelation A type 1 error The problem of multicollinear rarity. a type II error
28 The regression results indicate that the standard error of estimate is. 135.94 16.06 28.98 4.27
29 If the foreign interest rate is 12% while the domestic interest rate in 95 then the forward premium will be. 1.3 % 12% 9% 3%
30 Company X sells Rs.75 million dollars of 9.5% first mortgage bonds at par The company's marginal tax rate to 30% The after tax cost of debt is. 2.85% 3.175 6.68% 7.55
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