The central bank of an economy decides to implement a contractionary monetary policy stance to combat high inflation. Which of the following sets of measures represents exclusively monetary policy instruments that would achieve this objective?
A rise in the base interest rate and the sale of government bonds by the central bank (Quantitative Tightening)
A rise in the base interest rate and a decrease in the standard rate of value added tax (VAT)
A reduction in the base interest rate and the purchase of government bonds by the central bank (Quantitative Easing)
A reduction in government capital expenditure and an increase in the reserve requirements for commercial banks
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.