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Monetary policy

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Europe
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Monetary Policy - Monetary Policy Committee

Quiz - Inflation and interest rates - the work of the MPC

1. Fill in the blanks in the boxes below to give a brief description of the monetary transmission mechanism.
(Type your answers)
2. If the MPC raise interest rates, will the following variables be most likely to increase or decrease?

  • Consumption
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Investment
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Government expenditure
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Exports
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Imports
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Aggregate demand
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Aggregate supply
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Economic growth
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Unemployment
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Inflation
    (Select one answer)

(a) * Increase
(b) * Decrease

   

  • Exchange rate
    (Select one answer)

(a) * Increase
(b) * Decrease

   

3. How many members of the MPC are there?

(a) * 5
(b) * 7
(c) * 9
(d) * 11

   

4. How many members of the MPC are appointed by the Chancellor?

(a) * 3
(b) * 4
(c) * 5
(d) * 6

   

5. How long is it considered to take for an interest rate change to have its full effect on demand / production?

(a) * 6 months
(b) * 1 year
(c) * 18 months
(d) * 2 years

       

6. What is the current inflation target?
(Type your answer without a percentage sign)
7. The governor must write an open letter to the Chancellor if the inflation target is missed by more than how many percent either side of the target?

(a) * 0.5%
(b) * 1%
(c) * 1.5%
(d) * 2%

   

8. When was the MPC formed?

(a) * 1995
(b) * 1996
(c) * 1997
(d) * 1998