Y10 Economics - C27 Monetary Policy

What does the money supply refer to?

• The total value of goods and services

• The interest rates set by the government

• The amount of money saved in banks

• The total amount of money in the economy

Which of the following is NOT a component of the money supply?

• Bank deposits

• Coins

• Bank loans

• Government bonds

What is the primary tool of monetary policy?

• Changes in taxation

• Changes in government spending

• Changes in interest rates

• Changes in trade policies

What happens when interest rates are increased?

• Borrowing becomes cheaper

• Borrowing becomes more expensive

• Savings decrease

• Investment increases

What is expansionary monetary policy aimed at?

• Contracting the money supply

• Reducing inflation

• Boosting economic activity

• Increasing interest rates

Which of the following is a measure of monetary policy?

• Changes in labor laws

• Changes in government regulations

• Changes in interest rates

• Changes in fiscal policy

What effect does lower interest rates have on economic growth?

• It reduces job creation

• It boosts spending and economic growth

• It has no effect on economic growth

• It slows down economic growth

What is a limitation of monetary policy?

• It can be implemented quickly

• It is always effective

• It only affects interest rates

• There are time lags in its effects

What is contractionary monetary policy intended to do?

• Increase spending

• Lower unemployment

• Slow down economic activity

• Boost investment

How can the government control the money supply?

• By changing tax rates

• By reducing government spending

• By printing more money

• By increasing tariffs