(a)[12]
For several years, the US Federal Reserve (the country’s central bank) has used quantitative easing (QE) as a policy. Explain how quantitative easing affects the level of economic activity in a country.
(b)[13]
Discuss how far (i) an increase in wages and (ii) a loss of business confidence might influence the rate of interest.
- Discuss how far an increase in wages might influence the rate of interest. [6]
- Discuss how far a loss of business confidence might influence the rate of interest. [7]