An economy is experiencing rapid demand-pull inflation alongside high rates of commercial credit growth. Which of the following is a monetary policy measure most likely to restrict credit creation in the banking system and reduce aggregate demand?
An increase in the interest rate paid on commercial bank reserves held at the central bank
A reduction in the cash reserve ratio required for commercial bank deposits
A reduction in the government's budget deficit through public spending cuts
The purchase of financial assets from commercial banks by the central bank
176 exam-style questions on AQA A Level Economics 2.4 Financial markets and monetary policy (A-level only), covering 2.4.1 The structure of financial markets and financial assets, 2.4.2 Commercial banks and investment banks, 2.4.3 Central banks and monetary policy, and 2.4.4 The regulation of the financial system. Each one has a worked solution and a mark scheme showing where the marks go.