Monetary policy：練習題

Which measure is an example of monetary policy?

A country experiences high demand-pull inflation. Which combination of monetary policy actions is most likely to reduce this inflationary pressure?

The central bank of a country increases the base interest rate to reduce the rate of inflation. What is the most likely effect of this action on the country's exchange rate and its volume of exports?

What is a direct consequence of a central bank reducing the base interest rate?

Which instrument is a central bank most likely to use if it wants to implement contractionary monetary policy quickly without altering its benchmark interest rate?

Define monetary policy and identify one tool used by a central bank to implement it.

Explain how a reduction in the central bank's interest rate affects the rate of inflation in an economy.

Explain the transmission mechanism by which an increase in the money supply by the central bank can lead to an increase in aggregate demand through the effect on interest rates.

A country's central bank decides to change its policy to influence the level of economic activity.

(a) State the definition of the money supply. [2]
(b) Identify two monetary policy instruments, other than changing the money supply itself, that a central bank can use to influence the economy. [2]

(a) Define monetary policy.
(b) Identify two macroeconomic aims that a government might hope to achieve by implementing an expansionary monetary policy.