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

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Question 32

Which of the following statements regarding the institutional framework and operation of UK monetary policy is correct?

A

The Chancellor of the Exchequer is responsible for setting the Bank Rate, whereas the Monetary Policy Committee (MPC) determines the symmetry and level of the inflation target.

B

If the government implements a contractionary fiscal policy, the Monetary Policy Committee (MPC) may respond by adopting a more accommodative monetary policy stance to meet the inflation target.

C

The Governor of the Bank of England has the executive authority to unilaterally alter the inflation target if CPI inflation deviates from the target by more than 1 percentage point1\text{ percentage point}1 percentage point.

D

Quantitative tightening (QT) increases the reserve balances of commercial banks at the central bank, facilitating an expansion in broad money supply.

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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