How Central Banks Fight Inflation: Monetary Policy ExplainedQuiz

1.

A central bank raises its benchmark interest rate. What is the most direct intended short-term effect?

2.

What does 'quantitative easing' (QE) involve?

3.

The European Central Bank (ECB) has a single primary mandate. What is it?

4.

Which of the following is NOT a conventional tool of monetary policy?

5.

Explain why central banks fighting inflation must accept slower economic growth and potentially higher unemployment as a consequence.