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May 2025 Section II (Set 2)

0/20 marks

2025 · 3 questions · 17 parts · 20 marks

0Correct0Partial0Wrong17Unattempted
1(A)1(B)1(C)1(D)(i)1(D)(ii)1(D)(iii)1(E)1(F)2(A)2(B)2(C)(i)2(C)(ii)3(A)(i)3(A)(ii)3(B)3(C)3(D)
Context for question 2
Assume the economy of Jenland is in short-run equilibrium at a real output level above full-employment real output.
2(A)Monetary Policy and Central BankingEasy1 mark
The banking system in Jenland has ample reserves. Identify a specific monetary policy action that the central bank of Jenland would implement to return the economy to full employment in the short run.
2(B)Money, Banks and the Money SupplyEasy2 marks
Draw a correctly labeled graph of the reserve market for Jenland, and show the effect of the central bank’s action identified in part A on the policy rate.
Context for 2(C)
Based on the change in the interest rate shown on your graph in part B, will each of the following increase, decrease, or remain the same in Jenland in the short run?
2(C)(i)Interest Rates, Bonds and Financial MarketsEasy1 mark
The price of previously issued bonds
2(C)(ii)Monetary Policy and Central BankingEasy1 mark
The price level. Explain.
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