A central bank wishes to adopt a contractionary monetary policy stance to combat rising inflationary pressures. Which of the following policy actions represents an instrument of monetary policy directly controlled and executed by the central bank?
Lowering the rate of national insurance contributions to increase households' disposable income
Selling government bonds back to financial markets through quantitative tightening
Capping the maximum interest rate that commercial banks are permitted to charge on residential mortgages
Increasing the government's budget deficit by expanding capital expenditure on transport 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.