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Government Macroeconomic Policies
Quick questions on Monetary and exchange rate policy explained: O-Level Economics
2short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What are monetary policy through interest rates?Show answer
In most countries, the central bank changes the interest rate, the cost of borrowing and the reward for saving. Lowering interest rates is expansionary:
What is monetary policy through the exchange rate?Show answer
The exchange rate is the price of one currency in terms of another. A central bank can influence it, and the exchange rate affects the economy through trade and prices:
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