Question 25
[Maximum number: 1]
An increase in interest rates is an example of which type of policy?
A
contractionary fiscal policy
B
contractionary monetary policy
C
expansionary monetary policy
D
restrictive supply-side policy
CAIE A-Level Economics 5.3.3 Monetary Policy Stance
Practise recognising expansionary or contractionary monetary policy from interest rates, money supply and credit controls and choosing a stance for inflation, deflation or…
How this is tested
- classify lower rates, more money or relaxed credit as expansionary monetary policy
- classify higher rates, less money or tighter credit as contractionary monetary policy
- select contraction for above-target inflation and expansion for deflation or demand-deficient output