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Practice mode Money, Interest Rates And Output

Which of these is one of the Bank of England’s responsibilities towards the banking system?

Correct answer B. Assisting Banks that are in a difficult financial position

Explanation

As lender of last resort, the Bank of England supplies emergency liquidity to banks in difficulty to prevent a wider collapse of confidence in the financial system.

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Question 02 Money, Interest Rates And Output

Commercial banks are holding excess reserves because firms and consumers do not want to borrow. What is a cut in the discount rate likely to do?

Correct answer B. Not change the money supply because banks already have excess reserves they cannot lend

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Question 03 Money, Interest Rates And Output

When economists talk about the demand for money, what question are they asking?

Correct answer C. What proportion of your financial assets do you want to hold in non-interest-bearing forms

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