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Group A Economics Chapter Money and Value of Money MCQs:

The Central Superior Services (denoted as CSS; or Bureaucracy) is an elite permanent bureaucratic authority, and the civil service that is responsible for running the civilian bureaucratic operations and government secretariats and directorates of the Cabinet of Pakistan.

Central Superior Services (CSS) -> Group A -> Economics -> Money and Value of Money

Question:

If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will ?

A: fall
B: change in a certain direction
C: remain constant
D: rise
Answer: D

Question:

Which of the following events will lead to an increase in the demand for money ?

A: A decrease in the price level
B: An increase in the interest rate
C: An increase in the level of aggregate output
D: An increase in the supply of money
Answer: C

Question:

The main reason that people hold money to buy things is referred to as the ?

A: Transactions motive
B: Profit motive
C: Precautionary motive
D: speculation motive
Answer: A

Question:

The opportunity cost of holding money is determined by ?

A: the interest rates
B: the discount rates
C: the level of aggregate output
D: the inflation rates
Answer: A
Maham

Question:

In terms of the demand for money the interest rate represents ?

A: The opportunity cost of holding money
B: the rate at which current consumption can be exchanged for future consumption
C: the price of borrowing money
D: the return on money that is saved for the future
Answer: A

Question:

The chain of events that results from an expansionary monetary policy is ?

A: money supply increases the interest rate increase planned investment increases aggregate output increases and money demand increases
B: aggregate output increases the demand for money increase the interest rate increase planned investment
C: money supply increases the interest rate decrease planned investment increases aggregate output increases and money demand increase
D: money demand increases the interest rate decreases planned investment increases aggregate output increases and money demand increases
Answer: C
sunnyboy

Question:

An increase in the money supply aimed at increasing aggregate output is referred to as ?

A: contractionary monetary policy
B: contractionary fiscal policy
C: expansionary monetary policy
D: expansionary fiscal policy
Answer: C

Question:

The interest rate ?

A: is determined in the goods market and has no influences on the money market
B: is determined in the goods market and influences the level of planned investment and thus the money market
C: is determined in the money market and influences the level of planned investment and thus the goods market
D: is determined in the money market and has no influence on the goods market
Answer: C

Question:

For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to ?

A: increase the demand for money
B: decrease the money supply
C: increase the money supply
D: decrease the demand for money
Answer: C

Question:

According to the simple Keynesian view the aggregate supply curve is ?

A: horizontal until it reaches full capacity and then becomes vertical
B: downward sloping over all levels of output
C: upward sloping over all levels of output
D: vertical until it reaches full capacity and then becomes horizontal
Answer: A
Yamna

Question:

If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?

A: be replaced by foreign investment
B: Suffer even more
C: not be reduced as much as it would have been
D: be replaced by consumer spending
Answer: C
K

Question:

If planned investment becomes more sensitive to interest rate changes the crowding out effect will ?

A: fall to zero
B: be reduced
C: not be affected
D: be increased
Answer: D
ashidoll

Question:

The curve that illustrates the negative relationship between the equilibrium values of aggregate output and the interest rate in the goods market is the ?

A: aggregate demand curve
B: aggregate supply curve
C: LM curve
D: IS curve
Answer: C

Question:

When the money supply increase ?

A: The economy moves down the LM curve
B: the economy moves up the LM curve
C: The LM curves shifts to the left
D: The LM curve shift to the right
Answer: D

Question:

Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be __________ and the LM curve must be __________?

A: steep; flat
B: flat; steep
C: flat; flat
D: steep; steep
Answer: B
adnankhan

Question:

The primary function of bank is to ?

A: Make a profit
B: Control the money supply
C: Provide notes and coins for trade
D: Provide a cheque clearing system
Answer: A

Question:

The money supply is ?

A: Cheques + money + bank cards + credit cards
B: State Bank of Pakistan Issue Department
C: Money + bank cards + credit cards
D: Currency in circulation plus bank deposits
Answer: D

Question:

Three variables affect the demand for money they are _______ and __________?

A: The time of year bank opening hours the price level
B: bank opening hours, the proportion of weekly paid employee’s interest rates
C: the price level interest rates real income
D: The proportion of weekly paid employees the time of year real income
Answer: C
usman

Question:

When real income increases other things equal we can expect the demand for real money holdings to ?

A: increase
B: fall
C: not change
D: None of these
Answer: A

Question:

The monetary base is ________ and _________?

A: retail sight deposits building society deposits
B: bank deposits, building society deposits
C: Currency in circulation, banks cash reserves
D: retail deposits, wholesale deposits
Answer: C
Shahnila