6 marks
Q6(d) Using the material given, explain two things the Bank of England's Monetary Policy Committee might weigh before altering the base rate.
Edexcel · 9EC0 / 8EC0 / WEC11–14
Monetary policy comes up in 17 questions across the Edexcel A Level, AS and International A Level past papers (9EC0 / 8EC0 / WEC11–14), worth 176 marks between them. They run from 2016 to 2025 and appear on A Level Paper 2, A Level Paper 3, AS Level Paper 2.
Tariffs run from 1 to 25 marks. The commonest instructions are Evaluate (6), Explain (3), Draw/Diagram (3). Specification points covered: 2.6.2.
Q6(d) Using the material given, explain two things the Bank of England's Monetary Policy Committee might weigh before altering the base rate.
Q6(e) Discuss what, besides real wage movements, might have shaped the Monetary Policy Committee's decision to move the base rate.
Q2(d) Evaluate how high interest rates affect Ghana, or a developing economy of your own choosing, at micro and macro level.
Q1(a) Use an AD/AS diagram to show how the September 2022 UK base rate move from 1.75% to 2.25% might affect prices and output.
Q1(b) Pick the fall most likely to follow a rise in the base rate (demand-pull inflation / saving propensity / cyclical unemployment / sterling's dollar value).
Q6(g) Evaluate the use of interest rate policy as a tool for holding down UK inflation.
Q1(b) Explain one way inflation responds to a cheaper base rate, given the March 2020 cut taking it to 0.1% from 0.75%.
Q3(b) Which variable would most probably fall once base rates are cut? (house prices / sterling's exchange rate / employment / economic growth)
Q2(d) Evaluate lower interest rates at micro and macro level for Kenya or another developing economy you pick.
Q4(a) Give the meaning of an interest rate (2-mark definition).
Q4(b) Mark up an AD/SRAS diagram showing how a higher base rate might move equilibrium real output and prices.
Q4(c) Which demand-side policy would a base rate increase represent? (tight fiscal / tight monetary / loose fiscal / loose monetary).
Q1(d) Evaluate what dearer borrowing in Turkey would mean at both micro and macro level.
Q6(f) Evaluate how effectively moving interest rates keeps UK inflation under control.
Q2(b) Sketch an AD/AS diagram showing what higher interest rates do to real output and the price level.
Q3(a) Using the UK base interest rate chart for January 2008 to January 2017, give one consideration behind the Monetary Policy Committee's rate cut.
Q6(f) Evaluate how well the Monetary Policy Committee has kept UK inflation under control since 2011.
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