Question # 1

As the interest sensitivity of money demand increases

Choose an answer

The multiplier term increases

Fiscal policy has a greater effect on output

Monetary policy has a smaller effect on output

All of the above

What is the significance of underestimating transactions money.

Choose an answer

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.

To move from point E to point E1 is consistent with.

Choose an answer

Expectations of a constant price level

Adaptive expectations that have no adjustment for the period immediately following a change in the actual price

Rational expectations and NCM

A and B

When the value of the Rupee rises Pakistan goods become _____ expensive relative to foreign goods which ___ exports.

Choose an answer

more ; iincreases

less ; increases

more ; decreases

more ; increases

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

Choose an answer

IS ; right

Is ; Left

LM ; Left

LM ; Rfight

Employment tends to _______ whwn aggregate output.

Choose an answer

rise, falls

rise ; rises

falls; rises

Not change ; falls

An autonomous increase in the value of the domestic exchange rate.

Choose an answer

Increases output net exports and the interest rate.

Decreases output net exports and the interest rate

Decreases output and net exports and increases the interest rate.

Increase output and decreases net exports and the interest rate.

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

When considering any kind of economics indicator, prices are important because.

Choose an answer

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.

A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.

Choose an answer

Reduce

Increase

Have no effect on

Double

When the central Bank ________ the money supply the LM curve shifts to the _______ interest rates ____________ and equilibrium aggregate output.

Choose an answer

Increase ; right ; fall; increase

increases ; left ; rise ; decrease

decreases ; left ;rise ; increases

decreases ; left ; fall ; increases

An autonomous increase in money demand.

Choose an answer

Shift the IS curve to the right

Shifts the IS curve to the left

Shift the LM curve to the right

Shift the LM curve to the left

Which of the following causes M1 demand is decrease.

Choose an answer

A fall in the tax rate

An increase in income

A fall in the interest rate

An increase in the use of credit cards

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

Choose an answer

Purchases ; decreases

sales ; decreases

purchases ; increases

sales ; increases

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 _____the equilibrium level of aggregate output to ______l and the IS curve Curve to shift to the.

Choose an answer

rise ; left

rise ; right

fall ; left

fall ; right

Knowledge of the money supply can lead to good predications of nominal GDP only

Choose an answer

If the price level is stable

If the money supply is stable

Over very short periods of time

If the determinants of velocity are known

Why would corporations want to achieve zero balances in their checking accounts.

Choose an answer

To earn more interest

To avoid paying taxes

to keep a low profile

To circumvent banking regulations

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 equilibrium level of saving is.

Choose an answer

Rs.120

Rs.75

Rs.40

Rs.80

An autonomous decline in the value of the Pakistan Rupee makes Pakistan goods _______ relative to foreign goods and results in a ______ in net exports.

Choose an answer

Cheaper ; decline

Cheaper ; rise

dearer ; decline

dearer ; rise

An expansionary monetary policy

Choose an answer

Reduces interest rates

Increases real output

Shifts the LM curve to the right

All of the above

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