Question 1
What is meant by monetary policy?
A.
Higher rates → reduce inflation. B.
Central bank control of interest rates and money supply. C.
Rates affect house and share prices → wealth effect. D.
Central bank creates money to buy assets.
Question 2
Quantitative easing involves:
A.
Banning imports B.
Raising income tax C.
Central bank purchasing assets to increase money supply D.
Setting minimum wages
Question 3
What is meant by bank rate?
A.
Key policy rate set by Bank of England MPC. B.
Central bank creates money to buy assets. C.
Rates affect house and share prices → wealth effect. D.
Higher rates → reduce inflation.
Question 4
Hot money flows are attracted by:
A.
Higher imports B.
Relatively higher interest rates C.
Trade quotas D.
Lower interest rates
Question 5
A rise in bank rate tends to:
A.
Eliminate exports B.
Reduce aggregate demand C.
Increase AD always D.
Shift LRAS right
Question 6
What is meant by transmission mechanism?
A.
How rate changes affect AD. B.
Central bank creates money to buy assets. C.
Lower rates / QE → stimulate AD. D.
Central bank control of interest rates and money supply.
Question 7
What is meant by mpc?
A.
Monetary Policy Committee sets UK bank rate. B.
Higher rates → reduce inflation. C.
Central bank creates money to buy assets. D.
Rates affect house and share prices → wealth effect.
Question 8
What is meant by looser monetary policy?
A.
Monetary Policy Committee sets UK bank rate. B.
Rates affect house and share prices → wealth effect. C.
Rate differentials affect sterling and net trade. D.
Lower rates / QE → stimulate AD.
Question 9
What is meant by tighter monetary policy?
A.
Short-term capital flows seeking highest returns. B.
Higher rates → reduce inflation. C.
Key policy rate set by Bank of England MPC. D.
Central bank creates money to buy assets.
Question 10
The MPC sets policy to meet:
A.
Fixed exchange rate B.
The 2% CPI inflation target C.
Only fiscal balance D.
Zero unemployment always
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