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

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Question 6

Following a period of sustained high inflation, a central bank decides to implement a program of Quantitative Tightening (QT) by actively selling government bonds back to the financial sector.

All other things being equal, which one of the following combinations, A, B, C or D, is most likely to result from the successful execution of this policy?

OptionCommercial bank reservesGovernment bond yieldsPrices of financial assets
ADecreaseFallRise
BIncreaseRiseFall
CDecreaseRiseFall
DIncreaseFallRise
A

Combination A

B

Combination B

C

Combination C

D

Combination D

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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