Main menu For students For teachers Explore our subjects Student events & courses

Explore

More for students
Sign in

Free Economics resources

Practice Exam Questions

Analysis of Interest Rate Changes (MCQ Revision Questions)

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, WJEC

Last updated 12 Jun 2017

Share this content:

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.

Analysis of Interest Rate Changes (MCQ Revision Questions)

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


Share this content:

You might also like

In the News Teaching Activity – What is happening to consumer confidence in the UK? (May 2026)

21st May 2026

In the News Teaching Activity – What is the state of the UK’s economy? (Apr 2026)

30th April 2026

Macro Case Study: Japan's exchange rate

Topical case studies

In the News Teaching Activity – Could the UK economy tip into recession? (Mar 2026)

23rd March 2026

In the News Teaching Activity – Rising chocolate prices are contributing to inflation in UK (June 2025)

30th June 2025

How Interest Rates Shape Currency Value: Exchange Rates Explained

10th March 2025

Bank of England Cuts Interest Rates – What It Means for the UK Economy

6th February 2025

In the News Teaching Activity – what are the prospects for the UK economy in 2025? (Jan 2025)

6th January 2025