Practice Exam Questions
Analysis of Interest Rate Changes (MCQ Revision Questions)
- Level:
- AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 12 Jun 2017
This this revision video you get the chance to have a go at three multiple choice questions each of which tests your understanding about the likely effects of changes in monetary policy.
Question 1 Reasoning:
Impact of government sale of bonds to the commercial banks
- Sale of government bonds e.g. to the commercial banks
- Banks pay for the bonds with cash
- This reduces the liquidity of the banking system
- Makes commercial banks less able to lend out to borrowers
- Squeezes the supply of credit
- I.e. a contractionary monetary policy
- This is the opposite of quantitative easing
You might also like
Monetary Policy & Exchange Rates (Revision Presentation)
Teaching PowerPoints

Do interest rates affect business investment?
17th October 2014

Monetary Policy: Key Factors Affecting Interest Rates
17th August 2014

Monetary Policy less powerful in recessions
9th October 2013

60 Second Adventures in Economics- The Impossible Trinity
20th September 2012
Exchange Rates - An Introduction
Study Notes
Managed Floating Exchange Rates
Study Notes