Question 1
What is meant by exchange rate channel?
A.
Central bank control of interest rates and money supply. B.
Short-term capital flows seeking highest returns. C.
Key policy rate set by Bank of England MPC. D.
Rate differentials affect sterling and net trade.
Question 2
Hot money flows are attracted by:
A.
Lower interest rates B.
Relatively higher interest rates C.
Trade quotas D.
Higher imports
Question 3
Quantitative easing involves:
A.
Setting minimum wages B.
Banning imports C.
Central bank purchasing assets to increase money supply D.
Raising income tax
Question 4
What is meant by quantitative easing (qe)?
A.
Monetary Policy Committee sets UK bank rate. B.
Short-term capital flows seeking highest returns. C.
Central bank creates money to buy assets. D.
How rate changes affect AD.
Question 5
What is meant by transmission mechanism?
A.
How rate changes affect AD. B.
Key policy rate set by Bank of England MPC. C.
Higher rates → reduce inflation. D.
Rates affect house and share prices → wealth effect.
Question 6
What is meant by tighter monetary policy?
A.
Short-term capital flows seeking highest returns. B.
Rate differentials affect sterling and net trade. C.
How rate changes affect AD. D.
Higher rates → reduce inflation.
Question 7
A rise in bank rate tends to:
A.
Increase AD always B.
Shift LRAS right C.
Reduce aggregate demand D.
Eliminate exports
Question 8
What is meant by asset prices channel?
A.
Monetary Policy Committee sets UK bank rate. B.
Lower rates / QE → stimulate AD. C.
Rates affect house and share prices → wealth effect. D.
How rate changes affect AD.
Question 9
What is meant by bank rate?
A.
Higher rates → reduce inflation. B.
Central bank control of interest rates and money supply. C.
How rate changes affect AD. D.
Key policy rate set by Bank of England MPC.
Question 10
The MPC sets policy to meet:
A.
The 2% CPI inflation target B.
Zero unemployment always C.
Fixed exchange rate D.
Only fiscal balance
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