Question # 1

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 ______

Choose an answer

up ; rise

up ; fall

down ;rise

down ; fall

A decrease iin money demand other thing equal shifts the _____ curve to the

Choose an answer

IS ; right

Is ; Left

LM ; Left

LM ; Rfight

The purpose of financial intermediaries is.

Choose an answer

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.

The aggregate demand curve is downward sloping because a higher price level.

Choose an answer

Makes people wealthier and so they spend more

Causes higher wages and so people spend more

Cuts the real value of income and so people spend less

Decreases the real supply of money decreasing spending.

If the nominal money supply doubles while real money demand is unchanged what happens to the price level.

Choose an answer

The price level increases by a factor of four

The price level doubles

The price level is unchanged

The price level falls by one half.

The quantity theory of money allows monetarists to obtain a number of economics predictions by assuming a constant.

Choose an answer

Velocity of money

Nominal output

Overall price level

Stock of money

If young busness professionals in Pakistan suddenly decide that driving japan made cars is an important status symbol net exports will tend to _____________causing aggregate demand to.

Choose an answer

fall ; fall

fall ; rise

rise ; fall

rise ; rise

How do the banks gain from this corporate behavior.

Choose an answer

More loans can be made

Tax free profits can be made

Interest rates can be increased

By circumvent banking regulations

Intermediate goods are meant for

Choose an answer

Direct use by the consumers

Further processing

The term do not exist

None

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

Choose an answer

The level of aggregate demand for goods and services

Prices and wages

Government taxation

Government spending

A sale of bonds by the central bank should cause.

Choose an answer

A fall in the interest rate

An increase in the money supply

A decrease in the reserves of the commercial banks

An increase in the commercial banks loans to the public

In the case of an expansionary ___ policy the interest rate rise while in the case of an expansionary _______ policy the interest rate falls.

Choose an answer

monetary ; monetary

monetary ; fiscal

fiscal ; monetary

fiscal ; fiscal

A decrease in autonomous consumer expenditure causes the equilibrium level of aggregate output to __________ at any given interest rate and shifts the _______ curve to the __________

Choose an answer

rise ; LM ;right

rise ; IS ; right

Fall ; LM ; left

rise ;IS; Left

A major advantage of monetary over fiscal policy is that monetary policy

Choose an answer

Can be put into effect more quickly

Affects all sectors of the economy equally

Authorities are quicker to see the need for policy

Has a more direct and predictable impact on spending.

An increase in the rate of inflation which is not accompanied by any change in the volume of consumer goods sold will automatically increase the.

Choose an answer

Revenue from value added tax

Level of company profits

Level of unemployment

Average level of wages

Consider the five panels of the figure on the previous page in which of the five would monetary policy be the weakest.

Choose an answer

Panel a

Panel d

Panel b

Panel e

The quantity of money demanded varies

Choose an answer

Directly with both prices and output

Inversely with both prices and output

Directly with prices and inversely with output

Inversely with prices and directly with output

Which of the followig does not shift the IS curve .

Choose an answer

An increases in autonomous consumption

An increase in government spending.

A decline in government spending

A fall in theinterest rate

Which of the following persons would be considered unemployed.

Choose an answer

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

A decrease in fully autonomous investment other things equal shifts the ______ curve to the

Choose an answer

IS ; right

IS ; Left

LM ; Left

LM ; right

"The impact on this monetary aggregate of extensive finance innovation -the changes in the kinds of deposits and services offered by banks led the central bank to drop M1 as a n intermediate target with the changes in the way the public was holding payments balances the M1 aggregate no longer that the same reliable link to.

Choose an answer

Tax rates

The money supply

Aggregate demand

Government spending

More Classes

Other Links

PPSC Economics Chapter 4 Monetary & Fiscal Policy MCQs With Answers

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer