0455.4.4.3 — effects of monetary policy on government How monetary policy measures may enable the macroeconomic aims government to achieve its macroecono: past paper questions
Real questions on 0455.4.4.3 — effects of monetary policy on government how monetary policy measures may enable the macroeconomic aims government to achieve its macroecono
The newest 6 of 6 written questions. Open one to see it on the real paper.
- 0455/22 · February/March 2025 · Q3d[8]
Discuss whether or not an increase in the money supply will benefit an economy.
See it on the paper → - 0455/12 · October/November 2022 · Q13[1]
The central bank of a country decreases interest rates to help the economy out of a recession. How is this decrease in interest rates most likely to affect the levels of saving in and borrowing from the country’s commercial banks?
See it on the paper → - 0455/23 · October/November 2022 · Q5d[8]
Discuss whether or not an increase in commercial bank lending will increase economic growth.
See it on the paper → - 0455/21 · October/November 2021 · Q4c[6]
Analyse how an increase in the interest rate could reduce total demand in an economy.
See it on the paper → - 0455/22 · May/June 2021 · Q4c[6]
Analyse how a rise in the interest rate could cause a recession.
See it on the paper → - 0455/22 · February/March 2020 · Q4d[8]
Discuss whether or not a cut in the rate of interest will increase investment.
See it on the paper →
What examiners said
A number of candidates made unexplained statements and built their answers on these. For example, some candidates stated that an increase in the money supply would cause a fall in the country’s foreign exchange rate without explaining why this may be the case. A proportion of these then concentrated on the advantages and disadvantages of a lower foreign exchange rate. They effectively turned it in...
— Examiner report, February/March 2025, 0455/22 Q3(d) (Cambridge)
Candidates were often able to explain what a commercial bank was and that they made loans to households and firms. However, the question required them to explain how this would affect economic growth (either favourably or unfavourably) by making the link to firms borrowing to increase output and households taking loans to increasing demand for high-value goods. This would lead to an increase in to...
— Examiner report, October/November 2022, 0455/23 Q5(d) (Cambridge)
There were many excellent answers to this question and candidates were usually able to identify how an increase in interest rates would lead to a reduction in borrowing because the cost of borrowing has increased; this in turn would lead to a reduction in consumption. Stronger answers then went on to consider the impact on savings and investment, all of which contribute to reductions in total dema...
— Examiner report, October/November 2021, 0455/21 Q4(c) (Cambridge)
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