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

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Question 15

Which one of the following statements describing the effects of an increase in central bank interest rates is correct?

A

It will lead to a depreciation of the exchange rate, making exports more competitive.

B

It increases the cost of borrowing, which typically reduces the discretionary income of households with variable-rate mortgages.

C

It encourages commercial banks to relax their lending criteria, expanding the money supply.

D

It guarantees an immediate drop in both domestic cost-push and demand-pull inflation.

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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