In February 2017, China’s central bank increased the interest rate. Its aim was to cut borrowing and slow the expansion of the money supply, although it was concerned that a higher interest rate could lower the nation’s economic growth rate. This change in interest rate is likely to have added to the workload of skilled commercial bank workers.
(a)[2]
Identify any two functions of money.
(b)[4]
Explain two reasons why a central bank might wish to reduce borrowing.
(c)[6]
Analyse why skilled workers tend to earn more than unskilled workers.
(d)[8]
Discuss whether a rise in the rate of interest will reduce economic growth.
Worked solution & mark scheme
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