The Monetary Policy Committee (MPC) of the Bank of England is monitoring macroeconomic indicators to ensure CPI inflation remains close to its symmetric 2.0% target. Which one of the following developments is most likely to persuade the MPC to raise the Bank Rate?
A sustained rise in the household savings ratio alongside a contraction in the broad money supply (M4M_4M4)
A persistent depreciation of the sterling exchange rate combined with a narrowing negative output gap
An increase in the inventory-to-sales ratio of retail firms accompanied by a fall in unit labour costs
A significant decline in the velocity of circulation of money (VVV) while the money supply remains constant
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.