Economics 9708 · AS & A Level · Monetary policy
Explain what is meant by ‘the extra money was depressing the value of the US dollar on the exchange markets’.
Explain the difference between quantitative easing and supply-side policies.
Analyse whether Nigeria is likely to be a good prospect for investors.
Discuss the evidence in the information that companies have a different opinion to the Finance Minister about the value of monetary policy.
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Give up to 4 marks for explaining how a rise in the money supply causes a depreciation of the US$ either through: (i) more money -> depreciation; a rise in S of money can create domestic inflation -> US exports become relatively dearer or imports relatively cheaper -> demand for US$ falls -> depreciation; OR (ii) a rise in S of money reduces the rate of interest -> greater spending on imports -> supply of US$ increases -> depreciation. Candidates can still earn the full 4 marks with a response that combines features of both approaches. Accept any other relevant answers, for example lower portfolio demand for US$ or capital outflows.” …