ECONOMICS
MONETARY POLICY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
And supports the stability of the financial system
|
|
|
But does not support the stability of the financial system
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -We work to keep price rises low and stable That’s because low and stable inflation is good for the UK economy. We do this by setting the core interest rate at which we lend to the banks, and by buying (or selling) assets. This process is called monetary policy.
Detailed explanation-2: -What we use monetary policy for. Monetary policy affects how much prices are rising – called the rate of inflation. We set monetary policy to achieve the Government’s target of keeping inflation at 2%. Low and stable inflation is good for the UK’s economy and it is our main monetary policy aim.
Detailed explanation-3: -Here at the Bank of England it’s our job to make sure the UK’s financial system is resilient to any risks and shocks. We call this our financial stability objective. In our organisation there are two bodies that do this work: the Financial Policy Committee (FPC) and the Prudential Regulation Authority (PRA).
Detailed explanation-4: -The Bank of England Act 1998 gives the Bank of England operational responsibility for setting monetary policy to meet the Government’s inflation target. Operational decisions are taken by the Bank’s Monetary Policy Committee.