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3.6 Monetary policy

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Question 28

Demand-pull inflation is high. A household intends to pay for new furniture using an overdraft. The central bank makes price stability its priority.

What is the household most likely to do?

[1]
A

Bring the purchase forward, as lower interest charges make overdraft borrowing cheaper

B

Postpone the purchase, as higher interest charges make overdraft borrowing dearer

C

Go ahead as planned, as interest rate changes affect firms' borrowing but not households'

D

Bring the purchase forward, as overdraft charges stay the same while furniture prices keep rising

Markscheme

3.6 Monetary policy Questions

  1. GCSE
  2. /Economics
  3. /3.6 Monetary policy

116 exam-style questions on OCR GCSE Economics 3.6 Monetary policy, covering 3.6.1 What is monetary policy, 3.6.2 Monetary policy and macro objectives, and 3.6.3 Effects of monetary policy. Each one has a worked solution and a mark scheme showing where the marks go.

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