DP Economics Questionbank

Evaluate government policies to deal with the different types of unemployment.

Define the term monetary policy indicated in bold in the text (paragraph [5]).

List two functions of the central bank (paragraph [2]).

Define the term interest rates indicated in bold in the text (paragraph [5]).

Using an AD/AS diagram, explain how expansionary monetary policy might lead to economic growth (paragraph [1]).

Using an AD/AS diagram to support your answer, explain the mechanism through which monetary policy can help an economy reduce the level of unemployment.

Outline two roles of a country’s central bank (paragraph [1]).

State one reason why monetary policy is considered to have limited effectiveness in increasing aggregate demand if an economy is in a deep recession.

Using an AD/AS diagram, explain the desired impact of China’s “eased monetary policy” on its economic growth (paragraph [5]).

Define the term interest rate indicated in bold in the text (paragraph [2]).

Evaluate the effectiveness of monetary policy in reducing an economy’s rate of unemployment.

Explain how expansionary monetary policy could be used to close a deflationary (recessionary) gap.

Evaluate the effectiveness of monetary policy in reducing an economy’s rate of inflation.

Define the term monetary policy indicated in bold in the text (paragraph [2]).

Evaluate the view that fiscal policy is the best way to reduce unemployment.

List two responsibilities of a central bank (paragraph [4]).

If the government increased expenditures by K$21 billion, calculate the new level of GDP achieved.

With reference to the CPI data in Table 3, describe the most likely monetary policy response adopted at the end of 2018 by the central bank of Kanyaland.

Using real-world examples, evaluate the effectiveness of monetary policy to achieve low inflation.

Using real-world examples, evaluate the effectiveness of monetary policy to achieve low unemployment.

Using a demand and supply of money diagram, explain the likely effect on interest rates of a reduction in the minimum reserve requirement for banks (Text C, paragraph [1]).