CeMAP 1 2 & 3

Which of the following is NOT a tool used in monetary policy?

• Open market operations

• Reserve requirement

• Fiscal policy

• Discount rate

Which of the following is a contractionary monetary policy measure?

• Decreasing interest rates

• Buying government securities

• Increasing reserve requirements

• Lowering the discount rate

Which of the following is an example of an expansionary monetary policy?

• Selling government securities

• Increasing the discount rate

• Lowering reserve requirements

• Raising interest rates

The primary goal of monetary policy is to:

• Stabilise exchange rates

• Maximise employment

• Control inflation

• Promote economic growth

Which of the following is an example of a contractionary monetary policy measure?

• Buying government securities

• Decreasing the discount rate

• Lowering interest rates

• Increasing reserve requirements

When interest rates rise, what is the likely effect on mortgage repayments?

• Decrease

• Stay the same

• Increase

• No impact

How does an increase in interest rates affect the affordability of new mortgages?

• Increases affordability

• Decreases affordability

• No impact on affordability

• Depends on the individual's income

How might a decrease in interest rates affect the housing market?

• Increase demand for housing

• Decrease demand for housing

• No impact on housing demand

• Depends on the local market conditions

What impact do interest rate changes have on bond prices?

• Increase demand for housing

• Decrease demand for housing

• No impact on housing demand

• Depends on the local market conditions

How do interest rate changes affect the cost of borrowing for

• Decrease borrowing costs

• Increase borrowing costs

• No impact on borrowing costs

• Depends on the business's credit rating