Monetary policy (OCR A-Level Economics): Quizzes
📚Quizzes
Practise the questions
15 questions from this quiz
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Practise the questions
15 questions from this quiz
What does monetary policy involve?
What does monetary policy involve?
Central banks altering money supply & rates
What is symmetric inflation targeting?
What is symmetric inflation targeting?
Action when inflation rises or falls
What characterises asymmetric inflation targeting?
What characterises asymmetric inflation targeting?
Action only when inflation rises above
What is a liquidity trap?
What is a liquidity trap?
Interest rate cuts have little effect
What does quantitative easing involve?
What does quantitative easing involve?
Electronically printing money to buy bonds
What effect do higher interest rates have on consumer spending?
What effect do higher interest rates have on consumer spending?
Reduced spending
How do lower interest rates affect business investment?
How do lower interest rates affect business investment?
Increased investment
What effect do higher interest rates have on inflation?
What effect do higher interest rates have on inflation?
Reduce inflation
How does a decrease in interest rates affect AD?
How does a decrease in interest rates affect AD?
Shifts AD right
Why is the money supply curve vertical?
Why is the money supply curve vertical?
It's controlled by central bank
What happens to interest rates when money supply increases?
What happens to interest rates when money supply increases?
Interest rates decrease
What is the common inflation rate target?
What is the common inflation rate target?
Around 2%
What does the central bank do if inflation is above target?
What does the central bank do if inflation is above target?
Raise interest rates
What securities does the central bank buy in QE?
What securities does the central bank buy in QE?
Govt bonds & mortgage-backed securities
What happens to exports when a currency appreciates?
What happens to exports when a currency appreciates?
Exports become more expensive