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

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Question 65

Economic analysts forecast that the deflationary (negative output) gap in the domestic economy is projected to widen significantly over the next eighteen months.

In the short run, which one of the following policy measures is most likely to prevent this negative output gap from increasing?

A

The Central Bank increasing its main policy interest rate

B

A reduction in state spending on infrastructure accompanied by a move towards a budget surplus

C

The Central Bank implementing a large-scale asset purchase programme (Quantitative Easing) to lower borrowing costs

D

Market-led supply-side reforms aimed at reducing the power of trade unions and lowering real wages

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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