Monetary policy
4.3What the syllabus asks of you
- Definitions of money supply and monetary policy
- Monetary policy measures: changes in: interest rate; money supply; foreign exchange rate
- Effect of monetary policy on government macroeconomic aims: how monetary policy measures may enable a government to achieve its macroeconomic aims
Read the notes first
Chapter 4: Monetary policy
Drill this topic
Every question on Monetary policy, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
27 questions
1May / June 2026 · Paper 11 · Q20Show mark scheme →
Aa fall in total demand
Ba fall in the rate of unemployment
Ca rise in economic growth
Da rise in the rate of inflation
Mark scheme
2May / June 2026 · Paper 12 · Q20Show mark scheme →
Adecreasing government expenditure
Bdecreasing tariffs on imports
Cincreasing income tax rates
Dincreasing interest rates
Mark scheme
3Oct / Nov 2025 · Paper 13 · Q20Show mark scheme →
Amoney supply: decrease; interest rate: decrease; exchange rate: revaluation
Bmoney supply: decrease; interest rate: increase; exchange rate: devaluation
Cmoney supply: increase; interest rate: decrease; exchange rate: devaluation
Dmoney supply: increase; interest rate: increase; exchange rate: revaluation
Mark scheme
4May / June 2025 · Paper 11 · Q19Show mark scheme →
Agovernment expenditure or taxes
Binterest rates or the money supply
Clabour market or trade union laws
Dtariffs or quotas
Mark scheme
5May / June 2025 · Paper 12 · Q17Show mark scheme →
Aeconomic growth
Bincrease in the current account surplus
Clow inflation
Dredistribution of income
Mark scheme
6Oct / Nov 2024 · Paper 12 · Q18Show mark scheme →
Athe total quantity of foreign currency available within the economy
Bthe total quantity of money available within the economy
Cthe total quantity of money issued by the central bank
Dthe total quantity of money within commercial banks
Mark scheme
7Oct / Nov 2024 · Paper 13 · Q19Show mark scheme →
Aan increase in government spending
Ban increase in indirect taxation
Can increase in rules and regulations
Dan increase in the money supply
Mark scheme
8May / June 2024 · Paper 11 · Q19Show mark scheme →
Alower unemployment
Bprice stability
Creduced income inequality
Dreduced trade deficit
Mark scheme
9Oct / Nov 2023 · Paper 12 · Q17Show mark scheme →
Aincreasing the money supply
Bpreventing price rises in the food industry
Cremoving a monopoly's barriers to entry
Dsetting a maximum price for wheat
Mark scheme
10Oct / Nov 2023 · Paper 12 · Q19Show mark scheme →
Aconsumer spending increases
Bfirms buy fewer machines
Cpeople hold more cash
Dsavers earn lower rewards
Mark scheme
11May / June 2023 · Paper 11 · Q18Show mark scheme →
Adepreciate foreign exchange rates and increase education spending
Bincrease money supply and reduce interest rates
Cprovide subsidies and grants and lower sales tax
Dreduce income tax and improve infrastructure
Mark scheme
12Oct / Nov 2022 · Paper 12 · Q13Show mark scheme →
Adecreases / decreases
Bdecreases / increases
Cincreases / increases
Dincreases / decreases
Mark scheme
13Oct / Nov 2022 · Paper 12 · Q18Show mark scheme →
Aa benefit for borrowers receiving loans
Ba fall in the international value of the currency
Ca reduction in inflation
Dan increase in GDP
Mark scheme
14Oct / Nov 2022 · Paper 13 · Q18Show mark scheme →
Aincome tax
Bits foreign exchange rate
Cthe money supply
Dthe rate of interest
Mark scheme
15May / June 2022 · Paper 11 · Q18Show mark scheme →
AConsumers will be more willing to save when interest rates are high.
BConsumers will be more willing to spend when interest rates are high.
CProducers will be more willing to borrow from banks when interest rates are high.
DProducers will be more willing to invest when interest rates are high.
Mark scheme
16May / June 2022 · Paper 12 · Q18Show mark scheme →
Adiscourage bank lending
Bgive subsidies to firms
Clower income tax thresholds
Dlower interest rates
Mark scheme
17May / June 2021 · Paper 11 · Q17Show mark scheme →
AConsumers may save more.
BGovernment spending may increase.
CInvestment may be encouraged.
DThe exchange rate may fall.
Mark scheme
18May / June 2021 · Paper 12 · Q17Show mark scheme →
Abank lending
Binterest rates
Cthe budget deficit
Dthe money supply
Mark scheme
19Oct / Nov 2020 · Paper 12 · Q11Show mark scheme →
Acommercial bank deposits
Bgovernment spending
Cthe exchange rate
Dthe rate of interest
Mark scheme
20Oct / Nov 2020 · Paper 13 · Q11Show mark scheme →
Acommercial bank deposits
Bgovernment spending
Cthe exchange rate
Dthe rate of interest
Mark scheme
21Oct / Nov 2019 · Paper 12 · Q18Show mark scheme →
Aa reduction in interest rates and a reduction in income tax
Ba reduction in interest rates and an increase in income tax
Can increase in interest rates and a reduction in income tax
Dan increase in interest rates and an increase in income tax
Mark scheme
22Oct / Nov 2019 · Paper 13 · Q19Show mark scheme →
Aa decrease in the rate of inflation
Ban increase in the level of investment
Can increase in the level of savings
Dan increase in unemployment
Mark scheme
23May / June 2019 · Paper 11 · Q19Show mark scheme →
AA fall in interest rates will always increase inflation.
BA rise in interest rates may increase cost-push inflation.
CA rise in interest rates will raise the level of investment in a country.
DInterest rate changes have no impact on the level of production.
Mark scheme
24May / June 2019 · Paper 12 · Q9Show mark scheme →
Ato discourage lending by the commercial banks
Bto encourage investment to stimulate the economy
Cto increase individual savings
Dto reduce inflation
Mark scheme
25May / June 2019 · Paper 12 · Q20Show mark scheme →
Ahigher, decrease, increase, increase
Bhigher, increase, decrease, decrease
Clower, decrease, decrease, decrease
Dlower, increase, increase, increase
Mark scheme
26May / June 2018 · Paper 11 · Q16Show mark scheme →
Agovernment spending
Bthe money supply
Cthe rate of interest
Dunemployment benefit
Mark scheme
27May / June 2016 · Paper 11 · Q17Show mark scheme →
Aa decrease in the interest rate
Ba decrease in the rate of value added tax
Can increase in the power of trade unions
Dan increase in the standard rate of income tax
Mark scheme