PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 Monetarists believe that a reduction in _____ can be achieved by reducing. Unemployment, prices Inflation, wages Unemployment, wages Inflation, the quantity of nominal money
2 The quantity theory of money says that changes in ______ lead to equivalent changes in ______ but have no effect on. Prices, wages, output and employment. Output, prices, employment Nominal money, the price level output and employment. Nominal money output prices
3 In the event of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely. Fall Increases Remain the same Fluctuate
4 Expansionary fiscal policy in the classical model will cause aggregate demand to ______ potential output. Exceed Fall below Fluclaute around Remain equal to.
5 The Keynesian model is a good guide to ______ behavior and the classical model describes behavior in. <sup>Long run, short run</sup> Flexible, imperfect markets <div>Short term , long run</div> Ong run, imperfect market.
6 At the intersection of AD and AS equilibrium is achieved in. The goods market The money market The labour market All of the above
7 The equilibrium inflation rate is determine by the intersection of __________ and ___ demand, supply IS , LM AD, AS Labour demand, labour supply
8 In the classical model, potential output can not be increased by Monetary growth Better technology More capital higher labour supply
9 If a person thinks they are better off after a 10% wage increase, and all prices have risen 10%, then they are experiencing. Inflation A supply shocks Crowding out Inflation illusion
10 The AD schedule indicates that______ inflation is associated with______ output. higher , lower Higher , higher Lower , lower zero ,zero
11 All of the following are type of monetary policy except A nominal money stock target A balances budget An inflation target The pursuit of a target real interest rate
12 A fall in investment demand can result from Higher interest rates Lower expected future profits More expensive capital goods All of the above
13 A reduction in interest rates, causes an increases in the monetary base that result in an_____ in the availability of consumer credit and a _ in the cost of consumer credit. Reduction, increases reduction,reduction increase, reduction increases, increases
14 One of the transmission mechanism of monetary policy is through consumer house hold wealth.___________ and consumption. rise, increases, increases rise, falls, increases rise, increases, falls rise, falls, falls
15 If the central bank buys financial securities in the open market to increase the monetary base, this is an example of. Lender of last resort Financial intermediation Open market operations Financial regulation.
16 M4 is a _________ measures of money and includes deposits at both _____________ and Narrow, banks, building societies <i>Wide, banks, insurance companies</i> narrow, banks, insurance companies Wide, banks, building societies.
17 When real income increases, other things equal we fan expect the demand for real money holdings to. Fall Not change Increase Decrease
18 If I keep some money available in case I see a bargain this is an example of. Asset demand for money Transactions demand for money Token demand for money Precautionary demand for money
19 If banks and the private sector decide to hold less cash the money multiplier will be. Unchanged Larger Smaller unstable
20 Bank create money by Printing it Issuing debit cards Accepting chequeens Lending out part of their deposits
21 The primary function of a bank is to. Control the money supply Provide notes and coins for trade Make a profit Provide a chequeen clearing system.
22 Higher export demand _______ output and a higher MPZ______ output.. Reduces, reduces Reduces, increases Increases, reduces increases, increases
23 In an open economy leakages to imports ______ the value of the multiplier. Reduce Increase do not change None of these
24 When the level of income _______ there will be atendency for the trade balance to improve as imports. Increases, increase falls, fall Increase, fall fall , increase
25 The total multiplier for the economy will reflect. MPC and MPT MPT and MPZ MPC and MPZ MPC, MPT and MPZ
26 Aggregate demand in an economy trading internationally with a government sector can be written s. AD = C+1 AD = C + 1+ G AD = C +1+G+X+Z AD+C+1+G+X-Z
27 For given government spending and taxation the government budget deficit will grow in __________ and decline in _________ booms, booms recession, recession booms, recessions recessions, booms
28 Starting from a balanced budget, for a given tax rate an increase in income will cause the government budget to. Move into surplus Move into deficit Remain unchanged None of these
29 If the government increase spending and raises taxes by just enough to finance the increase it will. Leave output unchagned Increase output Reduce output Increase the MPC
30 Aggregate demand without a foreign sector is the sum of. c+1 C+G 1+G C+!+G
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