Question # 1

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

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

Automatic stabilizers

Choose an answer

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

An example of nondiscretionary fiscal policy would be.

Choose an answer

The operation of the welfare state

A Federal jobs program adopted to stimulate consumption

A tax cut adopted to stimulate consumption

An interest rate cut implemented to stimulate consumption

Which of the following would qualify as an aggregate supply shock.

Choose an answer

An unexpected increase in oil prices

Seasonally expected increase in oil prices

An unexpected reduction in consumer confidence

an anticipated tax cut

"Rising productivity does not in itself spell the end of inflation. With enough______ it would still be possible to whip prices into a froth the blank is best filled with.

Choose an answer

Income growth

Unemployment

Money growth

Taxes

The investment demand curve shows the relationship between the levels of.

Choose an answer

Investment and consumption

Consumption and Interest rate

Investment and interest rate

None

The limit of an economy's total productive capacity at any given time is set by

Choose an answer

The amount of money in circulation

Business demand for goods and services

The level of government spending and taxation

the quantity and quality of its productive resources

Those who favor setting the target rate of inflation at about 3% believe.

Choose an answer

The cost of moderate inflation can be minimized by indexing the tax system and bonds

that the cost of going to 0% is very low

That moderate inflation increases money illusion

Believe that moderate inflation aggravates the time inconsistency problem

In the 1930s, when Keynes was alive a expansionary fiscal policy taking everything else constant would have led to.

Choose an answer

A relative large increase in Y, a smaller increate n P

A relative large increase in P, a smaller increase in Y

Both Y and P increasing with an percentage

Only Y increase

Which of the following part of M1

Choose an answer

Stock negotiating accounts

Automatic transfer system accounts

Negotiable orders of withdrawal accounts

Demand deposits of mutual saving banks.

an asset that can easily be exchanged for goods and services is called a.

Choose an answer

Financial asset

Barter like asset

Illegitimate asset

Liquid asset

Which school of economic thought suggested that one possible cause of inflation was a push from the cost side.

Choose an answer

New classical economists

Monetarists

Marxists

Keynesians

The board pumps money out of the economy by

Choose an answer

Buying bonds

Selling bond

Creating cash

Lowering the reserve requirements.

The parable of Riding a Switchback suggests that stabilizing policy.

Choose an answer

Is not sufficiently stimulating or contra citing the economy at any time

Is desirable

Is effective

Is stimulating or contracting the economy at the wrong times.

The opportunity cost of holding currency decrease when

Choose an answer

Income decreases

The interest rate on bonds decreases

The interest rate on money decrease wealth decrease

Wealth decreases

The situation in which the imports are greater than exports is termed as.

Choose an answer

Trade surplus

Trade deficit

Budget surplus

None

If a perfectly competitive industry is in long run equilibrium all firms will

Choose an answer

Have a marginal costs

Have identical supply curves

Operate at the point where marginal cost just covers all variable costs

Have equal fixed costs

As a result of the increase in government expenditures disposable income increases by.

Choose an answer

Rs.10 billion

Rs.9 billion

Rs.20 billion

Rs.5 billion

In the Keynesian cross diagram, an increase in autonomous consumer function to shift _______ the equilibrium level of aggregate output to rise and the IS curve to shift to the.

Choose an answer

up ; left

up ; right

down ; left

down ; right

According to the supply side model a reduction in the tax rate.

Choose an answer

Could reduce the size of any budget deficit

Would have no effect on output

Would have no effect on consumption

None 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