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2.4 Financial markets and monetary policy (A-level only)

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Question 55

Inflation has begun to rise rapidly in Canada. What should policy makers do? Already the Bank of Canada has raised interest rates. Also, the government has begun to cut its spending whilst increasing taxes to run a budget surplus.

It can be inferred from the data that in response to rising inflation:

A

both monetary policy and fiscal policy are contractionary.

B

monetary policy is contractionary whilst fiscal policy is expansionary.

C

monetary policy is expansionary whilst fiscal policy is contractionary.

D

both monetary policy and fiscal policy are expansionary.

Markscheme

2.4 Financial markets and monetary policy (A-level only) Questions

  1. A Level
  2. /Economics
  3. /2.4 Financial markets and monetary policy (A-level only)

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.

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