To address accelerating demand-pull inflation, a central bank decides to implement a contractionary monetary policy. Which of the following actions represents a contractionary monetary policy?
A reduction in the base rate of interest to encourage commercial bank lending
An increase in the main rate of corporation tax to reduce investment spending
The sale of government bonds by the central bank to commercial banks to reduce liquidity
A reduction in government expenditure on welfare benefits and public infrastructure
27 exam-style questions on OCR A Level Economics Monetary policy. Each one has a worked solution and a mark scheme showing where the marks go.