Unit 3: Macroeconomics
Topic 3.5: Demand Management — Monetary Policy Questions
Practice 20 exam-style questions for IB Economics Topic 3.5. Review the question stems below, then unlock the full Question Bank to access markschemes, model answers, and AI grading.
11 mark
The primary objective of most central banks is to:
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When the central bank raises the base interest rate, the intended effect is to:
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The primary objective of most central banks is to:
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A decrease in interest rates is likely to lead to:
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When the central bank raises the base interest rate, the intended effect is to:
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A decrease in interest rates is likely to lead to:
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Explain how a central bank uses interest rates to control inflation.
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Lower interest rates may affect the exchange rate by:
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Central bank independence is considered important because:
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The monetary policy transmission mechanism describes:
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Monetary policy may be less effective in a recession because:
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Contractionary monetary policy may have the undesirable side effect of:
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The wealth effect of lower interest rates refers to:
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Explain the transmission mechanism through which lower interest rates can increase economic growth.
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Explain what quantitative easing (QE) is and when it is used.
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Explain the asset price channel of the monetary policy transmission mechanism.
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Quantitative easing (QE) involves the central bank:
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Explain how changes in interest rates affect the exchange rate and trade balance.
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