Practise Cambridge IGCSE Economics by identifying monetary-policy tools, explaining their effects on demand and inflation and evaluating price-stability trade-offs.
There are several policy measures a central bank or government can use to reduce unemployment. One policy measure a government could use to reduce unemployment is to increase its spending on building houses. The Federal Reserve, the central bank of the US, has two main aims. One is to maintain price stability and the other is to achieve full employment. Some central banks also have economic growth as a target, but none have HDI value as a target.
Identify two policy measures a central bank could use to maintain price stability.
Identify two policy measures a central bank could use to maintain price stability.
Two from: the rate of interest (1) the money supply (1) the exchange rate (1) quantitative easing / tightening (1).
2
If more than two measures are given, consider the first three.