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

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Question 12

To combat persistent inflationary pressures, the Bank of England's Monetary Policy Committee votes to increase the Bank Rate by 50 basis points and accelerate its asset sales (Quantitative Tightening). Simultaneously, the Chancellor of the Exchequer announces a reduction in the basic rate of income tax and an expansion of public investment in transport infrastructure, leading to a projected increase in the budget deficit.

It can be inferred from this scenario that

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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