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Edexcel A-Level Economics AS 2.3.6 4c Monetary Policy Instruments Interest Rates Asset Purchases to Increase Money Questions

Study Edexcel IAL Economics monetary policy instruments through interest rates, quantitative easing, reserve requirements, money supply and aggregate demand.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • explain interest-rate changes through consumption, saving, investment, exchange rates, inflation and economic growth
  • define quantitative easing and reserve requirements using central-bank asset purchases, liquidity, lending and money supply
  • classify monetary policy instruments as reflationary or deflationary and trace their aggregate-demand effects

Edexcel A-Level Economics AS 2.3.6 4c Monetary Policy Instruments Interest Rates Asset Purchases to Increase Money Questions question 1

[Maximum number: 4]

In September 2024, The Central Bank of China (The People's Bank of China) reduced the reserve asset (liquidity) requirement by 0.5 percentage points from 6.6\%.

With reference to the data, explain what is meant by the reserve asset (liquidity) requirement.

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