Bank of England

What are the two main objectives of the Bank of England?

• Controlling public spending and setting tax rates

• Monetary stability and financial stability

• Managing foreign exchange reserves and setting interest rates

• Controlling inflation and overseeing government budgets

How does the Bank of England respond to high inflation?

• It increases interest rates to encourage borrowing

• It lowers interest rates to reduce household debt

• It raises interest rates to discourage spending

• It prints more money to increase supply

How often does the Monetary Policy Committee (MPC) meet to set interest rates?

• Every month
  

• Every three months
  

• Eight times a year
  

• Once a year

What role does the UK government play in the Bank of England’s monetary policy?

• It directly sets interest rates

• It provides inflation targets, but the Bank decides how to achieve them

• It has full control over both fiscal and monetary policy

• It does not influence monetary policy at all

What is Quantitative Easing (QE)?

• Raising interest rates to control inflation

• Buying government bonds to inject money into the economy

• Increasing taxes to reduce public spending

• Printing more money to reduce the value of currency

Which of the following is NOT a factor the Bank of England considers when setting interest rates?

• Inflation rate

• Unemployment levels

• Global economic conditions

• Political party policies

What is the role of the Prudential Regulation Authority (PRA)?

• To supervise and regulate banks and financial firms

• To set the Bank of England’s inflation target
  

• To control fiscal policy and government budgets

• To oversee UK trade agreements

How do high interest rates affect the value of the pound (£)?

• They weaken the pound by reducing foreign investment

• They strengthen the pound by attracting foreign investment

• They have no impact on exchange rates

• They cause the pound to depreciate, making exports cheaper